Short GS? It's been quite a rally..

The company reports fourth-quarter earnings next week, offering an opportunity to separate hype from reality but it will take months for the bullish thesis in place since November to take root in the financial community. Specifically, banks should benefit from widening yield spreads in a Fed rate tightening cycle while Wall Street underwriting activity is expected to grow from current depressed levels due to higher economic growth, triggered by tax reform.

GS Long-term Chart (1999-2017)

Read more: Get Ready to Sell Goldman Sachs (GS) | Investopedia http://www.investopedia.com/stock-analysis/cotd/011017/get-ready-sell-goldman-sachs-gs-gs.aspx#ixzz4VYaUH3TM 

Great rotation no more?

Maybe 2017 finally will bring an end to all that talk about a "Great Rotation" of investor cash from bonds to stocks. In a broad sense, market watchers have been looking for the bond market to collapse for decades. But in practice, it hasn't happened. Investors keep shoveling cash into fixed income and pulling it out of stocks, despite an environment that would seem to suggest difficult times for bonds.

'Fake news' alert on the 'Great Rotation' from bonds to stocks

Trump reflation rally on its last legs? Some think so:

Amundi SA, Europe’s largest money manager, says investors who have driven U.S. stock markets to record highs in expectation of fiscal stimulus from the Trump administration may be in for a surprise. While a pivot to government spending and tax cuts may prolong the economic expansion in the U.S., Republican lawmakers will insist that fiscal measures don’t push up the deficit, Didier Borowski, the Paris-based asset manager’s head of macroeconomics, said in an interview. Even if President-elect Donald Trump succeeds in delivering stimulus, it won’t have an impact before next year, he said.

Europe’s Biggest Fund Manager Says U.S. Stock Bulls Got It Wrong - Bloomberg

The Trump rally is on its last legs, and according to one strategist, that means stocks could see a huge drop in the coming months. Since the election, the S&P 500 Index has rallied more than 6 percent while the Nasdaq hit another record intraday high on Friday. Meanwhile, the Dow Jones Industrial Average continues to hover just under the 20,000 level, underscoring what some analysts believe is a market that's starting to look too frothy. "The U.S. market, we feel, was already overvalued going into the election," Mark Eibel, director of client investment strategies at Russell Investments told CNBC's "Futures Now"last week. "It got even more extended, and I think you're seeing this year almost a re-balancing into some of those other areas, whether it's bonds, whether it's emerging markets."

Trump rally is losing steam and stocks could fall into correction territory: Strategist

Two new articles. The first deals with the consistency of fiscal policy:

• Some argue that Paul Krugman has flip-flopped on deficit spending.
• Closer inspection reveals that there isn't much in this, his supposed love for deficit spending has always been conditional on the state of the economy.
• One could appreciate Krugman's underlying economic model, as this has been the best in making sense of the post-financial crisis economy.

Who Is Actually Inconsistent About Deficit Spending? Not Paul Krugman - SPDR Dow Jones Industrial Average ETF (NYSEARCAIA) | Seeking Alpha

The second looks again at Microsoft and the effect of Windows 10 running on Snapdragon chips, which could be widespread:

• Microsoft finally managed to run a full version of Windows 10 on ARM-designed chips, Qualcomm's upcoming Snapdragon 835.
• Windows running on Snapdragon has the potential to become a powerful combination.
• We investigate the markets where this combination can make a real difference.

Is That A PC In Your Pocket? - Microsoft Corporation (NASDAQ:MSFT) | Seeking Alpha

Here is The Economist, US labor market closing in on full employment..

THE news that average wages grew by 2.9% in December, the final full month of the Obama presidency, provides more evidence that America’s labour market is heating up. For some time, America has been creating plentiful jobs—2016 was the fifth consecutive year with more than 2m job gains. But wage growth has been weak enough to cast doubt on the labour market’s strength

America’s labour market: Wage growth surges, just in time for the Trump presidency | The Economist

In fact, 2.9% wage growth may be close to the limit of what the economy can produce without sparking inflation. Prime-age labour-market participation surged in the past year or so, and has now recovered about a third of its fall after the recession. Some of the remaining shortfall is almost certainly structural, rather than something stimulus, such as lower interest rates, can fix. After all, the participation of prime-age men has been falling since the 1960s

America’s labour market: Wage growth surges, just in time for the Trump presidency | The Economist

Earnings matter less than the following five factors, according to Goldman Sachs:

Investors should “focus less on actual 4Q results and more on management insights on how firms are positioned on five policy issues that will drive 2017 earnings revisions and share prices,” say Goldman Sachs strategists, led by David Kostin.

Here is Kostin & Co.’s fab five, as laid out in a “Weekly Kickstart” note:

• Regulation: The Trump administration could change all sorts of rules, and that should help midstream energy companies (Goldman likes Williams Cos.WMB, -0.49%  , MPLX MPLX, +0.03%  and Enterprise Products EPD, +0.29% ). It also ought to boost banks ( Citi C, -0.47%  , PNC PNC, +0.73% and Morgan StanleyMS, +0.55% are Goldie faves).

• Fiscal spending: The strategists suggest big outlays on infrastructure could give only a modest boost to U.S. economic growth, but a yuuge lift to materials providers Vulcan VMC, +1.52%  , Summit SUM, +1.80%  and Martin Marietta MLM, +0.34%  .

• Destination-based border-adjusted tax: This would involve U.S. companies no longer being able to deduct import costs when calculating their tax bases, the Goldman team says. It could mean trouble for Nike NKE, +0.99%  , Dollar TreeDLTR, -0.52%  , VF Corp. VFC, -0.96%  and RH RH, +1.66%  .

• Interest deductibility and depreciation policy: Companies with high leverage could be hurt by this, the strategists warn.

• Corporate tax rate: The Goldman team expects the corporate statutory tax rate will drop to 25%. It notes the post-election outperformance by the stocks in its “high tax rate basket,” which is shown below.

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Another article out, getting SA Editor Pick:

• This company has built an impressive online advertisement engine which works differently than many others.
• It's actually the leader in performance-based ads. Recent innovations and acquisitions offer good ways to leverage its already leading position.
• Despite impressive financial performance, its shares are still below the all-time highs set a year and a half ago.
• There are some risks investors should consider though.

Criteo, The Little Known Online Advertising Engine Gem - Criteo S.A. (NASDAQ:CRTO) | Seeking Alpha

Two more articles:

• The incoming Trump government looks set on making considerable changes in US energy policy.
• The main planks look to be substantial deregulation and a shift in emphasis towards fossil fuels.
• We look at the likely effects of these policy changes on energy markets. We'll also highlight some little reported downsides.

Trump's Energy Blitz - The United States Oil ETF, LP (NYSEARCA:USO) | Seeking Alpha

• Reflation efforts in the wake of the 2008 financial crisis have been successful in keeping economies from slumping into depression, apart from some eurozone countries.
• But these reflation efforts have been running into diminishing returns almost everywhere, and are now running on their last legs.
• The question is, can we make an orderly transition, or will it be a disorderly one?

The Reflation Trade Is Coming To An End - SPDR S&P 500 Trust ETF (NYSEARCA:SPY) | Seeking Alpha

The VIX at 10.54, basically very near an all-time low while we have a high-volatile president, we're inclined to say this can only go one way..