Displaying items by tag: taper

Thursday, 09 September 2021 19:23

Goldman Sachs Makes a Big Call on Stocks

(New York)

Markets are fretting over a variety of concerns: spreading delta variant, Chinese regulator crackdown, and Fed taper. However, Goldman Sachs says these risks are overblown, as delta variant will likely be less worrisome economically and their Fed forecast is dovish. They see a sharp turnaround for cyclical assets such as higher equities and higher bond yields in the short run. Near-term optimism will fuel US and Euro equities and most likely boost Japanese stocks as well. Going so far as to recommend shorting long-term euro bonds, and buying economically sensitive currencies like the Norwegian krone and South Korean won, which will appreciate relative to the dollar. This near-term cyclical rally won’t last long as they expect 2022 to deal from a different deck that won’t be as friendly to investors.


FINSUM: Weaker jobs growth will also delay the Fed’s taper, aiding in the cyclical rally.

Published in Eq: Total Market
Thursday, 09 September 2021 19:18

Why You Shouldn't Worry About Economic Data

(New York)

The market was hit hard by bad economic data this week and yet markets barely budged. Consumer sentiment, Chicago Purchasing Managers Index, and Home Prices all swirled a whirlwind of bad news for markets and yet they hardly budged. This is because markets are convinced more than ever that bad news is good news because it will have the Fed kick the tapering can down the road. Powell made it clear that the new Fed environment will accommodate higher inflation and that while tapering might start this year, the Fed is a long way from rate hikes. This means growth-oriented interest rate-dependent stocks will do well as the Fed favors employment over inflation in its dual mandate.


FINSUM: Powell has all but confirmed a slow transition in monetary policy, don’t look for economic data to be the breaking point in your portfolio.

Published in Eq: Total Market

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