| Hey Income Aficionados, Each week, I join the rest of the Option Pit team for the Ticker Highlight Show – a completely free session where we break down our top and bottom stock picks of the week. Then we build a simple, directional options trade you can use right away – again, totally free. Before this week’s show, I want to give you a sneak peek: the stock I’m loving right now… and the one I think is in trouble. My Bullish Pick: GS Ok, Turbo Income has been in several versions of this trade since $615 because I’m watching everything that has to do with AI - even knock-on beneficiaries of the theme. Goldman Sachs (Ticker: GS) is one of them.
I’ve always liked owning the “smartest guys in the room”, but a few things really popped out at me in the past few months. In January, Goldman CEO David Soloman said that 95% of the process of building an IPO prospectus (something a bank has to do before going public on a stock exchange) can now be done by AI. So a six-week process for a medium sized team is now more or less a point-and-click. That is a serious cost saving influence, isn’t it? When you slash banker hours but keep the fee schedule pretty much the same, incremental revenue turns into operating-leverage rocket fuel. I’m fairly sure GS isn’t going to tell its next client: “you know what, we saved 50% on this IPO and we’d like to pass those savings on to you because we’re such good people.” Nope, probably not. Profit margins - wow. And how many deals and IPOs are we going to be seeing in the new inference phase of AI that I’ve been talking about for 6 weeks? Inference boom = IPO rush. Gonna be lit. Add the regulatory tailwinds that Trump is likely to push (lower capital requirements and streamlining listing rules) and the earnings report will sing. Need more? At 1.4x book and 11x forward earnings, GS is an AI sideplay that I’m very excited about. My Bearish Pick: USO In all my shows I’ve been saying short oil. I felt that Iran/Israel wouldn’t last and that threats to close the Strait of Hormuz were just that: threats. And the macro backdrop now tilts outright deflationary. With Gulf producers, U.S. shale outfits, and even previously sanctioned suppliers eager to pump at anything north of $70, supply is poised to swell just as global growth indicators cool. That one-two punch of softer demand and rising output is bad news for spot crude, but it’s even worse for the United States Oil Fund LP (Ticker: USO). The fund must continually roll front-month futures, and in a contangoed market that roll yield bleeds value month after month. Bottom line? There are plenty of smarter ways to express an energy view right now, which I’m not interested in doing. But in an over-supplied, slow-growth tape, USO looks like the wrong tool for the job. Deflation, slowing growth, USO is dead money at best. Will GS be our free trade setup on Monday? Only one way to know:add the Ticker Highlight Show to your calendar and join us at 10 a.m. ET.
Walk away with a directional options trade you can deploy before your second cuppa Starbucks cools. May the income be with you, | 