Displaying items by tag: Goldman Sachs

(New York)

Banks are usually the last ones to forecast a recession. Saying things are heading south is usually not good for business. However, despite this a slew of major banks, including Goldman Sachs, JP Morgan, and BofA, are all saying that the risks of a recession in 2019 are rising. While they are still loath to say a recession will happen next year, JP Morgan just increased the odds considerably, saying there is a 35% chance. In March they said it was just 16%. Jobs data has just started to weaken, which is a warning sing, and the yield curve has begun to invert, another indicator of trouble ahead.

FINSUM: We know a recession is on the way, but the timing is the tough part. Our best bet is towards the end of 2019 or Q1 2020.

(New York)

Here is a big warning. Goldman Sachs says that with bonds and stocks falling, and the outlook remaining poor, cash will be king. The bank thinks that stocks will only rise by single digits in 2019. In the words of Goldman analysts, led by David Kostin, the chief of Goldman’s research arm, “We forecast S&P 500 will generate a modest single-digit absolute return in 2019. The risk-adjusted return will be less than half the long-term average. Cash will represent a competitive asset class to stocks for the first time in many years”.

FINSUM: Goldman basically think T-bills are a great buy right now and we have a hard time disagreeing. The yields on short-term holdings are very favorable and quite rate insensitive.

(New York)

With all the volatility of the last month, and midterms, less focus has been on one of the most ominous of economic signs—the yield curve. Well, Goldman Sachs has just weighed in, warning investors that a yield curve inversion is looming. Goldman went further than to say that 2-years might be flat or overtake 10-years, the bank said that spreads between 2- and 30-year bonds would fall to zero. To put that call into perspective, it would be a narrowing of 50 basis points versus now. Goldman highlighted the move in its top themes to watch for 2019.

FINSUM: We have to give Goldman Sachs a little credit here as they have been consistently hawkish about rates for at least a year and are sticking to it. We tend to agree with this view.

(New York)

Goldman Sachs thinks this selloff is “overdone” and that a rally is coming. The bank thinks the current market presents a good buying opportunity and forecasts the market to rise 7% before the end of the year. According to the bank “The recent sell-off has priced too sharp of a near-term growth slowdown. We expect continued economic and earnings growth will support a rebound in the S&P 500”. To play the rebound, the bank says to look at stocks in its “high quality” basket. These include: Mastercard, Cognizant Technology Solutions, Alphabet, Accenture, Ansys, C.H. Robinson Worldwide, Edwards Lifesciences, International Flavors & Fragrances, and Ross Stores.

FINSUM: That is a very wide selection of choices, but more interesting to us is Goldman’s view on a recovery. We agree that this selloff seems to be an overreaction relative to the fundamentals.

(New York)

Fighting the impact of rising rates on one’s portfolio is likely a primary goal of many advisors and investors right now, so we will be running a series of stories on the topic. For instance, Goldman Sachs has just released a new ETF in the area. In what is being called “smart beta exposure to bond markets”, Goldman has launched the Goldman Sachs Access Inflation Protected US Bond ETF (GTIP). The fund selectively chooses Treasury Inflation Protected Securities and costs 0.12% per year. “TIPS present an attractive diversification opportunity for many investors with relatively low correlations to other major asset classes”, says Goldman.

FINSUM: TIPS seem like a good investment right now, but we wonder how this will perform versus other rate hedged ETFs, most of which seem to have a different angle.. On the plus side, it is quite low cost.