Trader Talk

Goldman Adds to Long Positions, Cites Better Risk-Reward


The U.S. markets rallied very briefly, as Europe came off its lows.

But traders also noted that mid-morning, Dominic Wilson, Director of Global Macro & Markets Research for Goldman Sachs, made positive comments on the markets. Mr. Wilson is a respected commentator with a following on trading desks.

"We may be a little early, and we are conscious that contagion is hard to predict, but we think risk-reward is better now than for several weeks," Wilson said. He noted they had added fresh long positions in their Consumer Growth basket.

Wilson said he had been "looking for opportunities when we see a clear disconnect between price action and cyclical news."

While noting that the markets have fallen far less this time than the last time there were sovereign jitters in January and February, Mr. Wilson said that some sectors "away from the epicenter of market worries" (U.S. consumer stocks) had taken substantial hits recently, thus prompting him to increase his position.

He did not elaborate what stocks he had specifically added to the portfolio.

On the macro picture: "the cyclical picture still looks very healthy," noting economic strength in the U.S., Korea, and even Europe.

On European banks: "So long as we are right that the ECB remains friendly on collateral rules, some of the more dramatic stories of bank liquidity issues seem implausible.????"

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