Top trades for 2014: all traders should listen up for this list. As 2013 has come to an end, stock market players all over the world are focusing their attention on how the events of 2014 will influence their trades. We would like to provide you with a list of the top five trades for the upcoming year, as predicted by Goldman Sachs. Their experts analyzed various trends and markets and came up with a series of recommendations meant to help guide any serious trader.
Goldman predicts a stronger growth of the US economy, a drop in the fiscal drag, decreased commodity prices, and a relative comeback of the Euro zone, coupled with a reduction of the global risk.
Read on for a summary of the top trades for 2014. Keep in mind that they are somewhat technical and may not be suitable for everyone.
Here are the top 5 trades for 2014, as predicted by the experts at Goldman Sachs. Let’s take a look at the countdown of top trades for 2014
No. 5: Long S&P 500 and Short AUD Futures
The trade: Buy S&P 500 futures and sell AUD-USD futures
The logic behind shorting AUD futures is the view that the Australian dollar will be the worst performer out of all major currencies in 2014, explained in part by Australia’s country specific risks. On the other hand, investing in US equities remains a profitable trade, making it our fifth-best top trade for 2014.
No. 4: Euro Area 5 Year Rates – Go Long and US 5 Year Rates – Go Short
The trade: Long EUR swap 5 year rate. Sell 5 year Treasuries
Even though the Euro zone is on the rebound, Goldman still feels that the US economy growth will surpass that of European countries. The recommended move is to go short on US trades, as going long might underperform. As the Euro zone will begin its comeback, it is advisable to go long on EONIA stocks.
No. 3: US Dollar Against The Canadian Dollar – Go Long
The trade: Go long on the USD-CAD (US dollar – Canadian dollar exchange rate)
Goldman predicts that the US economy will outperform and surpass the Canadian economy in the following year. This view is based on the fact that Canada has recently lost a major source of funding for its account deficit (currently about 3 percent of the country’s GDP). In addition, the Bank of Canada is the only central bank presumed to perform above average in 2014, making this trade No. 3 on our list of top trades for 2014
No. 2: Go Short Copper and Go Long Chinese Stocks
The trade: Sell Copper LME futures and buy HSCEI Index
While Goldman expects China’s economy to remain stable, it does believe it will perform outstandingly in 2014. This pair trade (going long with one trade and short with the other), is believed to avoid any risks, especially of an equity nature, associated with a long HSCEI position.
In addition, copper is believed to become an asset over the following year, numerous advantages to those who decide to go along with our No. 2 top trade for 2014
No. 1: Japanese, US & European Banks – Go Long
The trade: Buy SX7E, TPNBNK stock indices
Goldman predicts that the increased economic growth and the release of accommodative policies by major banks, the two main factors that helped sustain the US banking sector in 2013, will also have an influence on the Euro zone and Japan.
Consequently, investments with European, Japanese and US banks ranks as Goldman’s top move in 2014.
If you enjoyed our list of top trades for 2014, check out our “Top 5 Economic Predictions for the Next Decade.”
