In the annals of investment banking, Goldman Sachs deserves a chapter all its own. Seldom has a company been so reviled, admired, envied, and even feared.

Love it or hate it, there's no denying Goldman is a force to be reckoned with. When these guys predicted that oil would surge to $100 and beyond back in '06, many Fools laughed. The laughing stopped when oil proceeded to do just that. And when Goldman followed up its $100 prediction with a call for $200 oil just two years later, no one laughed-- and investors actually bid up oil futures, helping Goldman to fulfill its own prophecy. (Almost.)

For good reasons or ill, this banker's opinions remove markets – so even if you don't agree with Goldman, it's worth keeping an eye on what it's up to.

Bearish on luxury
As we've seen in recent weeks, Goldman's placed a series of bets on the American consumer. But this week, the banker hedged that bet. Americans may shop till the economy drops, but they're also following that economy downmarket -- which could be bad news for retailers catering to luxury shoppers. Arguing that Coach (NYSE:COH) and Nordstrom (NYSE:JWN) carry too-high multiples for an economy like this, Goldman pulled its buy ratings on both stocks last week.

Investors seem to be shrugging off the downgrades. They're still giving Coach an 18-times multiple to trailing earnings -- and a multiple of 22 for Nordstrom! Whether that optimism will survive the next round of monthly same-store sales reports, however, remains to be seen.

Does this car come with an ejector seat?
You could argue that Goldman's other major downgrade of the past week hails from a similar source. Toyota (NYSE:TM) has enjoyed a reputation for excellence for decades, and it charges premium prices for its cars as a result. You could argue, therefore, that as consumer wallets zip shut, they'll turn away from Toyota for this reason.

You could argue this, that is ... if you've been living under a rock.

The more obvious (and correct) conclusion is that Goldman sees the writing on the wall at Toyota. It pulled its buy rating on Japan's premier automaker because of the recalls, plain and simple. Goldman sees "harsh news flow" hobbling Toyota shares for the next three to six months at minimum, and longer if Toyota is unable to undo the PR damage it's suffered.

This downgrade aligns perfectly, by the way, with Goldman's previous endorsement of Ford (NYSE:F) -- and it's affixed a price target of $15 to that stock. Yet even as it expresses high hopes for American industry's revival, Goldman's not ready to pull up stakes from Japan entirely. Its top pick in the auto sector remains Honda (NYSE:HMC).

Spinning fertilizer into gold
So Coach, Nordstrom, Toyota -- all downgraded. Is there anyone, you may ask, that Goldman likes more today than it did before? I mean, caution in the midst of recession isn't a half-bad idea, but is there any place we can actually make money in this market?

Fortunately, Goldman thinks there is. Unfortunately, it's the same place it's been telling us to look for months: fertilizer.

On Monday, Goldman took a look at world agriculture markets and tweaked its estimated fertilizer prices upward. Per Goldman, the high prices that scared off farmers in 2009 have already faded from memory, and farmers are now "willing to return to more normal application rates." Potash prices will firm up north of $390 this year before spiking to $450 in 2011. And with info on the status of fertilizer inventory due out in mid-February, a USDA production report coming in March, and the prospect of new potash contracts being inked in India and China, Goldman sees multiple catalysts to drive these prices upward.

When you're in a hole ... dig faster!
To which I can only reply: Seriously, Goldman? You're playing the China card?

Last time I checked, the universal law of holes dictated that once you get stuck in one, the first thing to do is stop digging. But it seems that Goldman Sachs inhabits a Bizarro Universe. Upon finding itself in a hole, Goldman thinks the best thing to do is dig faster -- and hope that eventually, it will emerge on the other side in China!

Goldman has been full of fertilizer on this thesis for quite some time now. It's told us to buy both Mosaic (NYSE:MOS) and PotashCorp (NYSE:POT). And on balance, it's been wrong so far, as potash prices remained mired in the sub-$400-per-ton range. Worse yet, the last time China affected the equation, it drove prices down even further, inking a $350-per-ton contract with Belarusian Potash in December.

Foolish takeaway
Now, maybe Goldman will be proven right this time. Even the proverbial stopped clock is right twice a day, and we could be reaching high noon for a turnaround in the fertilizer market. Still, given the relatively high P/E and relatively low projected growth of Potash and Mosaic, I'd think that any chance of their outperforming the market hinges on a surprise upswing in potash prices.

Still, Goldman's China thesis is unoriginal in the extreme. And as for predicting a potash price rise, Goldman's been saying this for months. "Surprise" when this finally happens seems unlikely. Relief, maybe. But not surprise.

Fool contributor Rich Smith does not own shares of any company named above, but Coach and Ford Motor are Motley Fool Stock Advisor recommendations. The Fool has a disclosure policy.