Well, some folks think that Goldman Sachs (GS) has a computer intercepting every trade, swiping a penny each time, and that that’s how they make all their money.
But if you think that the bank’s traders actually have bigger, macro ideas, and that they make their money that way, The Pragmatic Capitalist has an interesting Goldman Sachs deck laying out some of their ideas.
1) Goldman sees a large divergence between the commercial real estate price estimates in equity REIT’s and CMBS market.
How to play it? Short REITs, buy AAA CMBS or sell protection on AAA CMBX.
2) Goldman sees continuing problems in developed nations that have financed their bailouts (ahem) through increased public debt.
How to play it? Short debt-laden developed economies, long select emerging economies. You can also buy USD, JPY, or EUR puts vs calls on the currencies of commodity exporting nations (AUD, BRL, CAD, NOK).
3) Goldman sees continued weakness in the Japanese economy.
How to play it? Sell the Yen or buy JPY puts. An equity short doubles as a short position for debt-laden countries above.
4) Goldman continues to believe oil prices are heading higher.
How to play it? Buy long dated oil futures. Short the crack spread.
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