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Thursday, May 13, 2021

The Huge Managed Money Has More Faith in Stocks Than Bonds


Goldman Sachs (NYSE:GS) investment management unit oversees about $1.7-T. and while it is still waiting for better entry levels to buy the dip, it continues to favor equities and credit over government bonds in a rejection of growing fears of an imminent recession.

Goldie expects the Fed to lower rates once more in Y 2019 before eventually returning to a hiking cycle, Vs the futures market that is pricing in a good chance of 3 more cuts.

That stance goes against the consensus investor view that has triggered a rally in bonds while punishing stocks in August.

Bond funds saw the 4th-biggest ever week of inflows through 14 August, while equity funds saw outflows, according to the reports.

Goldman does not subscribe to the view that this is the end of the business cycle. If its central thesis comes true, which is economic growth continues to slow from an elevated level but remains around trend in 2-H of this year and recessionary risk is low, then core inflation will gradually continue to grind higher.

The time seems ripe for contrarian Bullishness. But it is not for the faint of heart, you have to have discipline and knowledge to play in a strong Bull market that is consolidating 8 months of gains, if you do not have it, sit it out in cash and miss then set up for the next leg North.

Monday, the major US stock market indexes finished at: DJIA +249.78 at 26135.77, NAS Comp +106.82 at 8002.83, S&P 500 +34.97 at 2923.65

The S&P 500 rose 1.2% Monday in a broad-based advance that extended its rally to a 3rd day. The NAS Comp (+1.4%), DJIA (+1.0%), and Russell 2000 (+1.0%) advanced at least 1.0%.

  • NAS Comp+20.6% YTD
  • S&P 500 +16.6% YTD
  • DJIA +12.0% YTD
  • Russell 2000 +11.9% YTD

HeffX-LTN’s overall technical outlook for the major US stock market indexes is Bullish in here.

Have a terrific week.

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