The sages at Goldman published a strongly worded research note today, warning clients that the market is sheepishly awaiting to be executed by a psychotic Fed, who seem to be hell bent on higher rates. Moreover, they believe valuations are at peak levels and the risk-reward ratio doesn’t warrant outsized equity exposure, until economic growth suggests otherwise.
In short, gents, they see a storm coming. Time to board up the windows and stock up on dry goods and live out the rest of your days in the cellar.
“Until we see sustained signals of growth recovery, we do not feel comfortable taking equity risk, particularly as valuations are near peak levels,” the Goldman analysts wrote in their research published on May 17. “Our equity strategists have become more defensive, owing to heightened drawdown risk and growth scarcity.”
The firm remains overweight cash mainly due to the market ‘only’ expecting zero or one additional interest rate hike from the Federal Reserve through the rest of 2016.
“We believe the market’s dovish pricing of the Fed increases rate shock risk, in which case both equity and bonds could sell off. We are also not convinced the emerging market rally is sustainable,” the analysts said, echoing some of the recent sentiment expressed by Jan Hatzius, Goldman’s chief economist
Their model allocation.
But Yellen believes in negative interest rate though. Nobody gives a thing about what Yellen has to say anymore. Action speaks louder than words.
Yet they go bullish on crude at the same time. Fuckwits.
And long HY, short Ark fuel
As a bear this is possibly concerning
So, they must have just finished putting in all of their limit buy orders. Fuck them.
Goldman recommends cash today, brings mattress maker public tomorrow.