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Goldman: Big Banks, Latin America Are Best Buys for 2010

Tuesday, 12 Jan 2010 08:39 AM

A recent report from Goldman Sachs' shows the investment bank forecasting that big banks with consumer exposure and commodities will be among the best bets for 2010.

Goldman says that corporate profits will grow, especially in tech, business travel, office supplies and advertising — and that excess corporate cash will drive more mergers and acquisitions, bigger dividends and more stock buybacks.

Tech growth will be built on the move towards cloud computing and a corporate level refresh of personal computers and servers.

E-commerce will also continue to grow, taking advantage of its strength to draw business away from traditional competitors.

Commodity prices will rise as demand outpaces supply, and inflation on key agricultural and protein commodities will boost the agricultural and supermarket industries, but damage internationally underexposed restaurant companies because increased foreign demand won’t benefit their bottom lines.

Market-oriented Latin American nations and China are best positioned for what Goldman describes as the “post-crisis economy” and will outpace slow U.S. recovery.

As a supplier of natural resources, Latin America is becoming the go-to destination for new commodities consuming behemoths, particularly China.

Obamacare, Goldman claims, is less important than the fundamentals for health care, where financial engineering increasingly generates med-tech earnings per share.

Brazil's economy will not need additional stimulus in 2010, although some measures introduced in 2009 could become permanent, President Luiz Inacio Lula da Silva.

Speaking during a recent breakfast meeting with journalists, he said the lifting of tax breaks on capital goods and other manufactured items would be reviewed on a case-by-case basis, adding that the government's primary budget surplus target would be maintained at 3.3 percent of gross domestic product.

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