GOLDMAN: THE TOP 5 WAYS TO PLAY THE 2011 BULL MARKET

GOLDMAN: THE TOP 5 WAYS TO PLAY THE 2011 BULL MARKET
2 December 2010 by TPC 11 Comments
Jan Hatzius and his economic team released a very bullish note yesterday regarding the global economy. It was a relatively dramatic change for an economic team that had been fairly bearish for several years now. Hatzius describes why they have recently changed their position:

“The most significant shift in 2011 and 2012 is likely to be stronger growth in the US. Five years ago, our US economic outlook was very pessimistic….Even one year ago, we still had a below-consensus view and predicted a slowdown in GDP growth to a belowtrend pace in 2010. The reason for this was that the improvement in GDP growth in late 2009 had been due to temporary factors, namely the inventory cycle and the impulse from the 2009 fiscal stimulus package. With underlying final demand still stagnant, we thought that growth would slow through 2010, as indeed it has

That was then. Now, however, we expect a substantial acceleration in real GDP growth over the next two years to a 4% pace by early/mid-2012.

What has changed? Most strikingly, the performance of underlying final demand, or ‘‘organic growth.’’ Chart 2 shows real US GDP growth both including and excluding the short-term effects of inventory swings and fiscal stimulus.”



Why such a sharp acceleration? Our best explanation is that the pace of private-sector deleveraging is slowing in an environment of somewhat lower debt/income ratios, improving credit quality and moderating lending standards.

Although they’ve turned more constructive Hatzius and his team also maintain that there are risks. Specifically, they still believe the balance sheet recession will persist, unemployment will remain high and that it will generally feel like a recession on Main Street. The low inflation and adequate final demand environment will remain conducive to growth:

“It is important to emphasise what we are not saying. We are not saying that the US economy will now embark on a V-shaped recovery. We believe that the drag from inventories and fiscal policy will still keep real GDP growth at a moderate pace of 2½% in the next couple of quarters. And even the 4% growth pace that we expect for much of 2012 is still quite moderate relative to typical post-war recoveries. We are also not saying that deleveraging is over. Indeed, private-sector debt/income ratios are still likely to decline further. But it is the pace of deleveraging——which corresponds to the level of the private-sector balance——that matters for GDP. As the pace of deleveraging slows, the private-sector balance falls, and this implies a positive impulse to GDP growth.

Finally, we are not saying that the economy will feel good from a ‘‘Main Street’’ perspective. We only expect a gradual decline in unemployment as growth moves above trend, to 9¼% by the end of 2011 and 8½% by the end of 2012.

Because there is so much slack, inflation is likely to stay well below the Fed’’s ‘‘mandate-consistent’’ level of just under 2%.”

Their targets for most asset classes are extremely bullish with expectations for 20%+ equity returns and double digit commodity returns:



The best ways to play it? Goldman’s 5 favorite trades are as follows:

1. Short $/CNY via 2yr NDFs currently 6.41, expected return 6%: The current account positions in the US and China remain at the core of the global imbalances debate. We remain of the view that $/CNY has an important role to play in the rebalancing process.

2. Long US Banks (BKX) –– at 44.8, target of 57, expected return +25%: The improving US outlook, stronger loan growth, declines in credit losses and a gradually steeper yield curve should all be supportive.

3. Long US High Yield Corporate spreads (Selling protection on the CDX 15 index) –– at 528, target of 450, expected return of 8.7%: Better macro conditions, improved fundamentals and a positive view of future defaults suggest that the current level of HY spreads is still elevated relative to fair value.

4. Long Nikkei 225 (NKY) –– at 9988, target 12,000, expected return +20%: The Japanese equity market has underperformed other major markets. But, despite the disappointing ‘‘alpha’’ of Japanese equities over the years, the market displays significant ‘‘beta’’ to the improving global industrial cycle.

5. Long a Basket of Crude, Copper, Cotton/Soybeans and Platinum (‘‘CCCP’’), expected return 28%: After a decade of high commodity prices, we are most positive on these markets as they exhibit the largest structural supply constraints.

Source: GS

Value Investing Conference 2010

PRA

Der Markt ist schwer. Die Politik beherrscht die Märkte. Heute Irland morgen Portugal übermorgen Spanien. Zusätzlich verschärft sich das ganze in Asien (S-Korea).
Daher ist es schwierig Werte zu finden die ein Trend aufzeigen. Eine davon könnte Praktiker sein. Die Aktie notiert 1/3 des Buchwertes!

JASO

Solarwerte (vor allem Deutsche) haben enorm an Wert verloren...hier purzeln die Gewinnmargen doch vom Chart her sind wir bei dem einen oder andere Wert doch in die überverkaufte Zone gekommen. JASO sehe ich interessant mit einem SL bei ca. 7,08!

Ich sehe mir zur Zeit den Film "Endstation Parket" an und ein Satz ist mir hängen geblieben. Es geht nicht wieviel man gewinnt es geht nur darum wieviel man verliert!!

Medtronic

Medtronic was founded in 1949 as a medical equipment repair shop by Earl Bakken and his brother-in-law,
Palmer Hermundslie. Out of a garage, the company grew and by the mid-1950's they started making a new
kind of pacemaker that was more effective at regulating heart rhythm and less bulky than the ones used at
that point.
Today, the company is the world's largest manufacturer of implantable biomedical devices, with sales to over
120 countries. It operates in seven segments: Cardiac Rhythm Disease Management, Spinal, Cardiovascular,
Neuromodulation, Diabetes, Surgical Technologies and Physio-Control. Its primary customers include
hospitals, clinics, third party healthcare providers, distributors and other institutions, including governmental
healthcare programs and group purchasing organizations.
Currently, based on the company’s historical growth rate of 13.1%, tied with a forward earnings per share (EPS)
of $4.32 and a current book value of $13.52 brings the company's Fair Value to $66.11 per share. This gives
Medtronic Inc (MDT) stock a margin of safety of 49%.

OC Oerlikon

Tu mich schwer ob ich jetzt langfristig drin bleibe und die Aktien behalte oder ob ich jetzt die 11% Gewinn realisiere und wenn die Aktie korrigiert dann wieder einsteige. Mit dem heutigen "langen Docht" sieht es danach aus das die Akie erstmal korrigieren wird.

UBS

Morgen Zahlen heute gekauft..nachdem es gemäss meiner Trading Methode ein Kaufsignal generiert worden ist. Es ist ein Bullenmarkt viel kann man nicht falsch machen...

IVG

Die Commerzbank Jungs haben mir heute durch ihre Abstufung von Praktiker ein wenig Performance gekostet. Ich bleibe trotzdem dabei...Neuer Kauf IVG Immobilien 10000 Stk. zu 5,40

Praktiker

Kauf Praktiker nach den Bruch von 7,10 5000 Stk. ..Aktie aktuell bei 7,40..nach dem Bruch von 7,10 hat die Aktie frei fahrt bis ca. 8,50.

KBU

Verkauf KBU bei 4,60 macht ein Gewinn nach Abzug der Kosten von ca. 1500 Euro. schönes Weekend. :-)