Displaying items by tag: S&P 500

Monday, 25 January 2021 15:24

Goldman Sachs Backtracks on Bullish 2021 Call

(New York)

Goldman Sachs has been leading Wall Street in its bullish outlook for 2021. The bank has been forecasting 6.6% GDP growth, a full 2.5% above the consensus forecast. However, the bank just published a note which represents the first backtrack on that call. The bank pointed out that the new strains of COVID could pose a risk to growth. In particular, they explained that if the current vaccines do not give a high degree of protection against the new COVID strains, then the spending boom which they forecasted this year might be delayed to 2022. In the bank’s own words, if the new strains require a new vaccine “Virus-sensitive spending would likely retrench while a new vaccine is developed, and although a new vaccine could be approved in less than five months, the consumption boom would likely be delayed until 2022”.


FINSUM: We are sure they made this admission with some frustration as GS has been quite bullish. That said, they did so because it is very realistic. It should be noted that most authorities say that the current vaccine should cover the new strains.

Published in Eq: Total Market
Friday, 22 January 2021 14:14

Goldman Publishes a Crucial Call on the S&P 500

(New York)

The market has been a bit choppy to start the year, including a loss over the last five days. See the full story here on our partner Magnifi's site.

Published in Wealth Management

(New York)

With the calendar flipping to 2021, the big question on everyone’s mind is what 2021 will hold. 2020 was an exceptionally wild, and ultimately very profitable, year for investors. And within the final few months of 2020 was a developing buy signal that rarely occurs. That signal was the constant revision of earnings estimates in an upward direction. Remember that analysts’ earnings estimates are very frequently revised just before earnings are released, and the large majority of the time those revisions are towards the downside. However, in nearly every week of Q4, revisions moved estimates higher. According to Jefferies, “We’d argue that this is one of the most important tailwinds for equities, as earnings revisions are rarely positive”.


FINSUM: Revising earnings upwards breaks almost all rules of the equity research game, so when it happens it is quite notable. This suggests some strongly positive momentum for the economy.

Published in Eq: Total Market
Monday, 21 December 2020 17:00

Goldman Says the Market Will Surge in 2020

(New York)

The annual next-year forecast cycle for Wall Street’s investment banks is in and some of the findings are interesting. As usual, banks are fairly bullish. However, that was certainly not automatic this year given the huge tumult in markets in 2020. One particular forecast stood out—Goldman Sachs. The bank’s research team, led by David Kostin, has its official 2021 S&P 500 price target as 4,200, or just about 14% ahead of today. Interestingly, the bank also thinks gold is going to rise strongly, from the mid 1,800s today to 2,300. According to Kostin, “On absolute metrics like price/earnings...the market is very expensive relative to its history, in the 90th percentile or greater … But relative to interest rates, the stock market is somewhat attractively valued. Those are two different stories—absolute valuation versus relative valuation”.


FINSUM: As tough as it is to swallow on a historical basis, we think the interest-rates measured basis for current valuations makes a great deal of sense.

Published in Eq: Large Cap
Monday, 14 December 2020 12:59

Goldman Says a Sizable Correction Isn’t Coming

(New York)

Goldman Sachs went on the record with a bold call last week. They told investors that despite all the fears in the market, a big correction WAS NOT coming. Alessio Rizzi and his team at Goldman say that many indicators are showing a bullish outlook, and that big losses don’t seem likely. According to Rizzi, “more moderate risky asset returns are likely from here, rather than an imminent risk of a sizable correction”. One indicator Goldman cited as very bullish was the ratio between puts and calls. Right now the market is deeply favoring calls, with the ratio nearing the limits of its normal distribution.


FINSUM: So bulls look at this and say “aha, I’m right, the market will rise”; and bears say “exactly as expected, this is a contrarian indicator”! In our opinion, on the whole, there is plenty to be optimistic about.

Published in Eq: Large Cap
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