Goldman Sachs abandons short-term bearish view on stocks, says bottom is in

With the Easter long weekend behind us, stocks point to a weaker start for Monday as the coronavirus fallout concentrates.

A big question to start the week is whether investors have gotten ahead of themselves, after the S&P 500 pulled off its best weekly gain in 45 years as the Federal Reserve threw more money at it. ‘economy. Banks may have something to say about this Tuesday as they kick off earnings season, shedding light on the damage the virus has done so far.

Our call of the day, from a team of Goldman Sachs strategists led by David Kostin, says the worst of the market rout is behind us. A “previous short-term drawback of 2000 [for the S&P 500] is no longer likely. Our year-end S&P 500 target remains at 3,000 (+ 8%), ”the team said in a note to clients on Monday.

Why? “The combination of unprecedented political support and a flattened viral curve significantly reduced downside risk to the US economy and financial markets and pulled the S&P 500 out of bear market territory,” Kostin said, whose gloomy stock market forecasts for last month came the day before. a complete collapse of the market.

“If the United States does not experience a second surge of infections after the economy reopens, the ‘do whatever it takes’ stance of policymakers means the stock market is unlikely to do any further. hollow, ”Kostin said.

They also claim, as their chart shows, that bear markets are generally lower before the nadir in economic data:

And Goldman is in the camp who thinks the gloomy quarterly results ahead will matter less than earnings per share for 2021. Still, it’s a little marked confidence in a time of so many unknowns and no general switch for. rekindle the world’s economies.

Here’s Michael O’Rourke, JonesTrading’s chief market strategist, with a comment to balance all that positivity:

“While the progress of last week’s pandemic and the Fed’s programs are not exactly one-time events, they will not be repeated on a daily basis as disappointing results and economic data will be for the next two months. Whatever the activity of the Federal Reserve, it is not a band to go higher. ”

The market

The Dow DJIA,
+ 0.29%
, S&P SPX,
+ 0.07%
and Nasdaq COMP,
-0.37%
are in the red, while CL00 oil prices,
-0.14%
are back in the dark after Sunday’s production cut deal. European markets are closed for an extended Easter break. The Nikkei NIK,
+ 1.80%
and KOSPI 180721,
+ 1.00%,
which led to a largely declining day in Asia.

The buzz

“Barring a health care miracle,” the United States is planning 18 months of phased shutdowns, said Neel Kashkari, director of the Federal Reserve Bank of Minneapolis. A major pork producer, Smithfield Foods, has shut down a large US plant due to rampant coronavirus outbreaks. Employees at drugmaker Biogen BIIB,
+ 0.20%
helped spread the coronavirus to six states. The President of the European Commission has warned against any plans for a summer vacation.

Banks are releasing first quarter results this week, but it will take months to see who survives a depression-level drought.

Billionaire Mark Cuban does not rule out a race for the American presidency. And Democratic candidate Joe Biden has been accused of sexual assault by a former staff member. His deputy campaign manager says that “absolutely did not happen”.

Table

Stimulating the coronavirus will not be enough to repair a damaged market, says Octavio Costa, portfolio manager at Crescat Capital. Here is his graph:

Random readings

Deadly storms ravaged the South on Sunday

Go up and down the same hill over and over again. The latest trend in triathlon

Madrid’s most vulnerable are desperate in the middle of a coronavirus lockdown

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