Goldman Sachs' John Marshall on Top Tactical Trades for Earnings Season

Goldman Sachs' Tactical Trades List

• 🎯 The latest quarterly list of top 25 tactical trades for earnings season has been released by Goldman Sachs.
• 💡 This list includes upside names like Broadcom, Disney, Celsius, and Win, and downside names such as MAS and Super Micro.
• 📈 Historically, this list has outperformed the S&P 500 by 3% annually over the past 13 years.

AI and Market Themes

• 🧠 A key theme is the bottom-up work on next year's estimates, with analysts conducting thorough research.
• 🚀 Broadcom is highlighted as a significant AI name due to its custom compute AI chips and visible earnings, with above-consensus estimates for the next year.
• ⚠️ The market has experienced monumental volatility over the last quarter, with the biggest earnings day moves since 2009, driven by themes like AI and government policy.

Options Market Activity

• 📈 There has been a significant increase in options activity, particularly in single stocks like Tesla and zero-day options on the S&P 500.
• 🧐 While headline figures suggest high activity, the nature of this trading, with equal puts and calls on S&P options, indicates it's not necessarily a sign of high fear.

Specific Stock Catalysts

• 🎬 Disney is highlighted for its strong direct-to-consumer and parks businesses, along with upcoming cruise ships, suggesting potential for earnings beats and consensus increases.
• 💰 Johnson Controls is noted for its buyback opportunity, which is scarce in the current market focused on capital expenditures.
• ✈️ Wynn Resorts is seeing a resurgence in Macau volumes due to its loyalty program, and an upcoming UAE investor day is also a point of interest.
• 🎟️ Madison Square Garden (MSGE) is on the list due to strong interest in experiences, which has driven significant business.
• 🏦 Citigroup is a top pick due to its fee growth and business simplification aspects, performing well year-to-date among major financial institutions.

Market Volatility and Seasonality

• 📈 The VIX has seen a rapid increase, which is not uncommon for this time of year, with October often being the highest volatility month.
• 🗓️ This seasonal pickup is attributed to companies and investors feeling nervous about making year-end numbers and navigating a final flurry of catalysts.