As the trading year comes to an end, some of Wall Street’s biggest firms typically begin releasing their forecasts and forecasts for the coming year, and Goldman Sachs was the latest to do so here. Investors need to keep an eye on what these big firms are doing and recommending to their audiences, as some of them may be bluffing and some may be insiders “talking their book” just to get the masses to accept their point of view.
Based on several economic indicators and other trading indicators, it appears that Goldman Sachs is talking its talk right now rather than bluffing the market into taking a position or behavior that benefits the bank at the expense of Main Street. Knowing this, investors will want to pick up pen and paper for this analysis, since much of what was said in the bank’s 2025 macroeconomic report is not what it seems.
After all, these are the three main areas that Goldman Sachs wants you to work in (and support their positions). Bonds via iShares 20+ Year Treasury Bond ETF NASDAQ: TLTenergy reserves through Select Energy Sector SPDR Fund NEW SIRKA: XLEand even industrial stocks consisting of net exporters in the United States through SPDR fund for selected industrial sectors NYSEARCA:XLI.
Stocks may be overvalued, buy bonds
Goldman Sachs could have just said it, but they decided to break it down in a very dry and corporate style. However, everything becomes clear to those who want to analyze the language of the report. Goldman says the difference in bond yields today compared to the S&P 500 has led them to believe stocks are overvalued.
iShares 20+ Year Treasury Bond ETF Today
iShares 20+ Year Treasury Bond ETF
As of 01/10/2025 16:00 Eastern
- 52 week range
- $85.16
▼
US$101.64
- Dividend yield
- 4.39%
- Assets under management
- $50.35 billion
According to the data collected and explained in the report, the likelihood of a stock market decline is higher than that of another bull run. They also note that today’s bond yields do not match US GDP growth and inflation rates in 2025, so there is a mispriced opportunity.
So how can investors know if it’s a bluff or if they think it is? It’s impossible to know for sure, but the Commitment of Traders report is a great start. This report measures future inventory levels of large commercial institutions and other market participants, so it is an important metric to track.
It turns out that many merchants (large banks and prime brokers) are now selling S&P 500 futures the same way they have been since 2007, and everyone knows what happened next. At the same time, 10-year Treasury stock levels are rising, and it appears that Goldman is part of the crowd shorting stocks and buying bonds.
Oil: the best bet for commodities
Goldman also notes that commodities could be a great addition to portfolios in 2025. However, they decided to focus on one specific product. Crude oil, they note, carries many risks of a supply tail shock, which in English means there is a high probability that supply will become tight and cause prices to rise.
SPDR Energy Select Sector Fund Today
Select Energy Sector SPDR Fund
As of 01/10/2025 16:10 Eastern
- 52 week range
- $78.98
▼
$98.97
- Dividend yield
- 3.64%
- Assets under management
- $33.71 billion
No wonder Warren Buffett bought up to 29% of shares Occidental Petroleum Co. New York Stock Exchange: OXY over the past two quarters, or why JP Morgan Chase decided to take a stake in an energy ETF worth $730.8 million as of December 2024. Even Paul Tudor Jones said in a recent CNBC interview that oil is incredibly cheap.
While most investors would turn to gold in this situation, the precious metal has posted a significant premium in recent months that is now cooling as the inflation outlook weakens along with geopolitical conflicts. So, if you compare apples to apples, oil offers the best risk-reward ratio in the world of commodities.
Hedge funds have also taken active positions in oil futures in recent weeks, making aggressive bets that the price per barrel could soon break above resistance. This article provides a complete breakdown and list of stocks that may be better suited to outperform the market.
Net exporters will outpace growth in 2025
The most surprising part of this report is the way Goldman talked about currencies. They said the local currency, the dollar, has created tail risks that could send emerging market currencies and stocks higher if they materialize. This means that stocks like Alibaba Group New York Stock Exchange: BABY China will see a monster rally if the dollar falls.
SPDR Fund for Selected Industrial Sectors Today
SPDR fund for selected industrial sectors
As of 01/10/2025 16:10 Eastern
- 52 week range
- $109.95
▼
US$144.51
- Dividend yield
- 1.23%
- Assets under management
- $20.08 billion
It’s no surprise that Michael Burry and David Tepper made this their largest portfolio position. But what happens to the lower dollar as well? Foreign buyers now have relatively greater purchasing power to purchase American exports, making the manufacturing sector a good place to operate.
According to the latest manufacturing PMI report, new orders have become the most explosive segment over the past 26 months, meaning many industries in the United States are bracing for a potential new wave of exports. Investors may also note that Wall Street is supporting gains in these three stocks on the back of this export theme.
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