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Top Links: Goldman's top investment ideas for 2017

A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the Web

Goldman Sachs released its top six trade ideas for 2017 Thursday. In some cases – a stronger U.S. dollar and higher bond yields – the forecasts are unsurprising to the point of conventional wisdom. There are two interesting ideas that were less predictable, notably a bullish view on European dividend swaps,

"Dividend swaps, as a hybrid between credit and equities, currently appear attractive in a cross-asset context," writes [Co-Head of Global Macro and Markets Francesco] Garzarelli. "We forecast a high 'carry' compared with other assets, which reflect both fundamental risks and supply/demand imbalances from structured products issuance."

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Investors should not get too carried away with this advice – the predictions for 2016 were generally way off base.

"Here Are Goldman Sachs' Top Trade Ideas for 2017" – Bloomberg

"@NickatFP 2016 trades recap... " (includes table) Twitter

The biggest market news of the past week, by far, is the massive global reallocation of investment assets from bond markets to U.S. equities. Jefferies Research provided the numbers.

"Over the past week (10 to 16 November), a massive rotation appeared from bonds to US equities. The US$18bn withdrawal from global bonds was the heaviest since June 2013 while that from EM bonds was the record heaviest. Investment grade corporate bonds, high yield bonds, government bonds, US municipal bonds all experienced significant withdrawals. US equities attracted a record high injection (latest: US$31bn) with large caps and financials being the major beneficiaries. Small caps, health care and industrials also recorded sharp inflows."

"@SBarlow_ROB Jefferies: "Massive rotation from bonds to U.S. equities" – (research excerpt) Twitter

"@ReutersJamie The U.S. 10y Treasury yield is more than 200 bps higher than Germany's 10y yield, the widest spread in more than quarter of a century." – (includes chart) Twitter

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Counterpoint: "Trumpflation: Not Now, Maybe Later" – Wall Street Journal

The departing head of the Canadian Radio-television and Telecommunications Commission went off on Rogers Communications and Shaw Communications for cancelling their streaming product Shomi.

"It was a "shock" to hear the companies were throwing in the towel on the platform so soon after it launched, said CRTC chair Jean-Pierre Blais in prepared remarks for a speech in Ottawa on Wednesday at the annual conference of the Canadian chapter of the International Institute of Communications.

"I have to wonder if they are too used to receiving rents from subscribers every month in a protected ecosystem, rather than rolling up their sleeves in order to build a business without regulatory intervention and protection," he said in his prepared remarks.

"CRTC chair blasts Rogers, Shaw for decision to shut down Shomi" – Hamilton Spectator

The U.S. dollar is ramping higher and the gold price is getting bludgeoned as the Financial times reports.

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"The shiny stuff did indeed pop higher once the election result emerged, but the gains were fleeting. Right now, gold stands at $1205 an ounce, down by some 9.5 per cent from the month's peak, reflecting the likelihood that the Fed will keep pumping up interest rates in response to the infrastructure spending splurge outlined by the president-elect."

"Gold still sliding, now down to $1205/oz" – FastFT

"Dollar Extends Trump-Trade Rally as Gold Declines With Stocks" – Bloomberg

Tweet of the Day: "@morrisdave: Piketty sticks it to Canada-EU free trade deal… " – Twitter

Diversion: "Mystery over Dutch WW2 shipwrecks vanished from Java Sea bed" – BBC

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About the Author
Market Strategist

Scott Barlow is The Globe's in-house market strategist. He is a 20-year veteran of Canadian investment banks, including Merrill Lynch Canada, CIBC Wood Gundy and Macquarie Private Wealth (MPW). He was a highly ranked mutual fund analyst for 10 years and then, most recently, the head of a financial adviser support team at MPW. More


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