03/52. Global Maco Conf takeaways, EQ themes. 

1/ Replays. 

A very busy week in GS Asia with record turnout at our Global Macro Conference. And a timely one to set the macro stage, though am mindful a lot can change post Trump inauguration. 

This landing page has webinar replays, and more. Notable speaks include Gina Raimondo, Kellyanne Conway, José Manuel Barroso, Jude Blanchette, Yiping Huang, Michael Pettis, Philip Lane, etc. 

I really enjoyed the bull-bear debate on AI featuring our very own George Lee (Co-Head, Goldman Sachs Global Institute) and Jim Covello (Head of Global Equity Research) – link. And related to this, earlier piece from Allison Nathan - Gen AI: too much spend, too little benefit? 

2/ Polls 

I particularly like the investor polls just so we can get our feelers out on expectations and how markets are positioned for the year ahead. Full list of poll results at this link. 

In a line I would wrap it up as: US macro exceptionalism, bearish Europe, still most bullish US equities followed by AEJ then Japan, most bullish Tech followed by Financials and Healthcare. 

Macro poll 

Equity poll

I was looking back at the 2024 polls to make a comparison. Key delta were: (1) 2025 conference participants were overwhelmingly more positive US equities (60+% vs 35% in 2024); (2) most preferred sector after Tech was swapped from Healthcare in 2024 to Financials this year. 

Meanwhile, the mood around China feels more downbeat YoY on macro outlook and reflation prospect. In the poll half of investors expect 3-4% medium term GDP growth, ~45% expect RMB to end the year above 7.5, and less than 20% expect PPI deflation end this year. On Trump & Trade, most seem to be pricing in a 10-20% tariffs. My worry is we see upside risk to this. 

On brighter note… 

3/ Dollar upside. 

Our baseline forecast is for continued robust GDP growth of 2.5% for the year ahead. It remains above consensus though it feels in recent period that market has gradually converged to our positive views. Or put the other way, there is now a much smaller cushion against any downside risks to growth. 

This outperformance drives our revised forecasts which calls for continued Dollar appreciation over the year. See EURUSD parity within 3 months and weakening further to 0.97 by 2Q. And USDCNY to hit and flatten out towards 7.5. 

4/ Global EQ themes. 

In my mind the two key debates for global equities are (1) whether stocks priced for perfection; (2) if one should continue playing US exceptionalism vs EM value. Given the current interplay between growth, rates and valuations, I suspect we will still see an ‘ok’ year for global equities although Sharpe would be lower, and Vol higher (in particular the volatility of EM assets in the form of EM FX, equities etc). 

Beneath the hood I think 2025 is set up to be the year of the Alpha bet. These are some themes I am most focused on: 

Diversify to amplify. Beyond the Mag-7, Ex 29 is a list of our global ex-Tech compounders. Likes of Inditex to Moutai, Linde and Oriental Land. If you like the quality factor and already loaded up on Mag-7, this basket of stocks have de-rated quite a lot. 

Trump Trade 1 - US M&A candidates. Below plots strategic and sponsor M&A deals in excess of $100m in value. Expect a strong pipeline on macro growth and elevated CEO confidence. GSRHACQN is our M&A Candidates basket – a list of companies that have a higher probability of M&A activity in coming 12 months.

Trump Trade 2 – Small business optimism. GSRHSMBX was a consistent outperformer during Trump 1.0. And recently we have seen a sharp pick up in business optimism. This is not a small cap basket. This is a portfolio of businesses with >50% of sales exposure to SMEs.

US AI phase 3. Pretty self-explanatory. These companies have already seen strong earnings revisions. Names are mostly in the software/ media/ IT services segments, including Salesforce, Datadog, Gitlab, Snowflake etc. 

EU GRANOLAS. Worth another bite? Lagged broader index in the past 12m with one of the largest de-ratings within Europe. Finger pointing at trade tensions (ASML) and China headwinds (LVMH). Some of these headwinds could still persist for a quarter or two, but eventually these companies will regain their premium growth narrative. Meanwhile, profitability remains strong, balance sheets are rock solid, and they should benefit from stronger Dollar (40% of sales in US). Watch earnings which kicks off 28^th Jan with LVMH and SAP. 

Japan Experience basket. Planning a holiday to take advantage of weak Yen? You are not alone. Our new basket GSXAJEXP aims to capture the uptick in both inbound tourism as well as domestic consumption underpinned by wage reflation. Names include Aeon Mall, Fast Retailing, Pan Pacific, Oriental Land etc. 

Asia shareholder return. In a complex macro environment I’d rather just keep things simpler. Show me the cash. GSSZDIVG is a basket of high yielding stocks overlaid with positive dividend growth. 

Earnings scarcity. I continue to pound the table on our Strong vs Weak Earnings Revision baskets (GSSZSERV vs. GSSZWERV). 

Plotting these vs. MXAPJ (orange): 

Power Up Asia. GSSZPOWE is a basket of 50 stocks to play the growing power demand driven by tech manufacturing and data centers, as well as advancements in electricity transmission capacities. 

China EM exporters. The play on trade re-routing from US to other EM export destinations. We have already seen strong share price divergence on back of earnings delivery. 

Affluent India. This is our primer from a year back. Basket is 10% off its peak given cyclical headwinds which I fully appreciate. View is this is a niche cohort of 60m consumers with high income generation, strong wealth effect, defensive consumption power, and growing to 100m by 2027. Remains one of my favorite structural themes in India.