Goldman Sachs Sees Inflation Picking Up In Europe


27% profit every 20 days?

This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.


In the Macro Rates Monitor out Tuesday morning, Goldman Sachs analyst Francesco Garzarelli stated that his core view on euro-area inflation is higher than consensus. Mr. Garzarelli made several key points regarding his view:
  • Based on our forecasts for a rebound in oil prices from 2015H2 onwards and a continuing weakening of the Euro/$, we find that energy prices should start contributing positively to headline inflation as soon as next year.
  • As a result, we calculate that inflation swaps are implicitly pricing a very low `core' inflation outlook (relative to our own forecasts) until 2018.
  • We believe markets have been too focused on the negative impact of oil prices on near-term inflation while largely dismissing its delayed positive effect on prices coming from the boost in households' disposable income.
  • Purchases of linkers on the ECB QE programme should lift breakeven inflation and should also lift inflation swaps.
In the note, several key U.S. inflation data points for the week ahead were noted.
  • Tuesday: Empire State manufacturing survey
  • Wednesday: January industrial production, the release of the Minutes from the Jan 27-28 FOMC meeting
  • Friday: February ‘flash' manufacturing PMI
Goldman Sachs expects ‘core' inflation to hover around current values for the next two quarters and then start to drift higher from 2015 H2 onward, reaching 1.1% by the end of next year.

27% profit every 20 days?

This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.


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Posted In: Analyst ColorAnalyst RatingsFrancesco GarzarelliGoldman Sachs