Thread by @Convertbond

Goldman Year End Targets vs. Current Level

Gold: $2300 vs. $1835
Brent: $61 vs. $56
Copper: $9500 vs. $8100
Core PCE Inflation: 1.6% vs. 1.4%
US GDP: +6.4% vs. -3.4%
Treasuries: 1.30% vs. 1.11%

via @BearTrapsReport

One of the problems with sell side banks is a classic silo-ization. Splintered fiefdoms litter the field often times with little top down coordination between the views of equity analysts, economists, high yield bond traders, fixed income strategists, rates trading etc.

(2)

Each group is a power center with their own p/l, their own Senior MD leadership - with the highly profitable silos carrying the most weight, influence over high level decision making across the firm. In periods of significant market dislocations

(3)

across asset prices and economic data, significant divergence can develop. Over 95% of economists and strategists have never sat in a risk taking seat, thus cost centers carry far less influence. At the beginning of every year, it makes sense to look at

(4)

all the banks (at least 6 or more) from top down, cross asset view and look for dislocations, out of place data and above all classic indications of group think. Nearly every year, the most widely held consensus view if often times

way out of touch with the mid-year and or end of year result. In Goldman’s case, an interesting divergence has developed between their economic data and commodity price outlook. Year in, year out, the Fed’s favorite pastime has been unintentionally embarrassing W St. economists.

.@jsmauro13 is an outstanding follow in this regard. Identifying cross asset dislocations in terms of economic research views relative to what actually risk takers think is highly important. Goldman’s view on a first Fed rate hike vs. commodity outlook doesn’t jive imho.

End.