Displaying items by tag: Goldman Sachs

(Houston)

The turnaround that energy prices have seen over the last year are simply astounding. This time last year prices were plummeting and there were incredibly dire demand forecasts. Fast forward to the present and you have a very tight supply-demand picture and legitimate talk of the new commodities “supercycle”. With that in mind Goldman has chosen 3 stocks which they say are going to be winners in the new environment: ConocoPhillips (COP), Devon Energy (DVN), and Hess (HES).

FINSUM: Both Devon and Hess are primarily exploration and production companies, which means they are very tied to headline oil prices. Given the tightness of supply, it makes sense they could benefit nicely.

(New York)

Bonds are incredibly expensive right now, but despite this, they may keep going higher, says Goldman Sachs. The firm is specifically referring to high yield bonds, which are very pricey right now and have low spreads to Treasuries. For example, only 10% of high yield bonds currently trade with spreads above 5 percentage points above Treasuries, compared to 25% in November. This makes Goldman believe the easiest gains are already in the bag, but given that high yield bonds are sensitive to an improving economy and they have appreciated even while Treasuries have fallen, Goldman feels the asset class could be in for more appreciation.

FINSUM: This makes sense. It is also worth noting that historically speaking, high yield bonds have no correlation to the performance of Treasuries.

(New York)

Infrastructure investment is a fascinating area that can have good yields and strong returns. However, advisors should be forgiven if they feel like the hype that has surrounded it over the last five years has never matched reality. Politicians have been talking about a new golden age of US infrastructure investment since the Obama years, yet almost nothing has materialized. That seems like it will change under Biden, and the whole sector looks poised to benefit. According to Goldman Sachs, the big winners look likely to be materials, construction, and machinery stocks.

FINSUM: Frontrunning this infrastructure package could be a good idea. As soon as there is an indication that it may become a reality, there will likely be a work-from-home-like jump in prices.

(New York)

You have probably seen a few articles floating around, but the last several weeks have really hammered it home: we are at the precipice of a new commodities supercycle. The pandemic brought on a huge fall in commodities prices because of a tumble in demand. But as the economy is heating back up, demand is jumping and supply is not matching it. Raw materials demand has surged across the board. Most have been paying attention to oil prices, but check out others like copper and metals. Goldman sees the dawn of a new decade-long demand surge akin to what happened between 2000 and 2010, when the rise of emerging markets/BRICS drove huge raw materials consumption. This time around Goldman says that the green industrial revolution will create a “capex cycle” on part with what happened to emerging markets in the 2000s.

FINSUM: The bank also argues that social and tax policies that are favoring income redistribution to poorer households is bullish for commodities since those households tend to spend a higher percentage of it.

(New York)

Jeffrey Currie, head of Commodities Research at Goldman Sachs, said there is the beginning of a structural bull market in raw materials…View the full article on our partner Magnifi’s site