Finance 0

Goldman Capitulates: Closes Out 5 Of Its 6 Top Trades For 2016 With A Loss

By Kurt Osterberg · On February 9, 2016

Back in November, for the convenience of those “who can’t wait to take the other side of Goldman’s clients, and thus the same side of Goldman’s prop desk” we previewed Goldman’s “Top 6 Trades for 2016.”

Naturally, we explicitly stated that the “the best trades for 2016 will be to… do the opposite of the Top 6 trade recos” for obvious reasons.

It’s time for an update, because just 40 full days into 2016, not only has Goldman been closed out on its Top Trade for 2016, namely being long the USD vs both the Yen and the Euro, but virtually all of its other trades: according to a just released update, Goldman has just been stopped out – with a loss – on 5 of its 6 top trades for 2016.

From Goldman:

Close long USD against an equally weighted basket of EUR and JPY on 9 February 2016, opened on 19 November 2015 at 100, with a potential loss of around 5%.

Close long 10-year US break-even inflation (USGGBE10 Index) on January 18, opened on 10 November 2015 at 1.60%, with a target 2.0% and a stop on a close below 1.40%, with a potential loss of 21bp.

Close long an equally-weighted basket of MXN and RUB versus short an equally-weighted basket of ZAR and CLP on 21 January 2016, opened on 19 November 2015 an entry level of 100,with a potential loss of 6.6% including carry.

Close long 5-year 5-year forward Italian sovereign yields vs short 5-year 5-year forward German yields on 9 February 2016, opened on 19 November 2015 with an entry level of 160bp and a stop loss of 190bp. The spread is currently at 219bp. The potential loss is 49bp.

Close long large cap U.S. banks through the BKX Index relative to the S&P500 on 11 January 2016, opened on 19 November 2015 at 100, with a potential loss of 5.4%.

Stay long a basket of 48 non-commodity exporters (GSEMEXTD Index) and short a basket of 50 EM banks stocks (GSEMBNKS Index), opened on 19 November 2015 at 1.12. We will monitor this trade as the ratio between the two indices, with a target of 1.30 and a stop-loss of 1.04, currently at 1.17.