Another Reason Why You Should Buy, Buy, Buy... Straight From The Sachsth Branch Of Government
With the full frontal we have been doing lately of Team Jan and Team Jim, we have ignored some of the other more prominent strategists at Goldman, which is why today we shift our focus on Chief European Strategist Peter Oppeneimer. We present his most recent comprehensive outlook report titled, not surprisingly, "From hope to growth." Don't expect anything too earth-shattering or against the party line of the government sponsored hedge fund. You will, however at the very least, find out where some of the catchier slogans in the administration come from.
First, a summary of Goldman GDP forecasts for those that need a convenient place to know what various governments will be goalseeking their output to.
Next, here is Goldman caught in the act of spiking the Kool Aid with assorted rose colored chemicals: the chart below highlights various rebounds from initial recession lows:
Goldman proceeds to indicate that the current rally is perfectly normal... if one assumes that a 90 percentile outlier rally is considered normal.
And just in case anyone is still confused what the first step of the "change you can believe in" cycle is, here it is below. Not surprisingly, it fits perfectly with the administration's world view... it is titled "hope."
Here is how earning multiple expansion occurs (as well as actual earnings growth) in the various phases of the "hope" cycle:
Next, we see why in Goldman's regression to the mean mind, a 4.5% global GDP growth is so critical. So what happens if growth is half or less: sales growth of half of the projected 10%.
In order to make it simple for what economic areas Goldman's clients should expect numerous further puff pieces, the firm points out why second derivatives are so much more relevant than actual data:
Goldman is expecting to underwrite much more in new equity through new IPOs and secondary/rights offerings. Over €1 trillion more.
Lastly, here are the sectors in which M&A activity will be positively rampant. Shockingly, there are sectors in which companies have, gasp, positive net cash. Perhaps a weighted distribution would have been more useful here, as last time we checked the bulk of the world was still drowning in debt.
So next time someone asks, where does the government (or at least its Sachs branch) see the global economy headed, you will know. Granted this outlook is somewhat different from the PIMCO branch of the USA, but we'll let it slide. Between Goldman pumping equities and overall corporates, and PIMCO expressing dormant priapism for Treasurys, there is no way you can do wrong. Just make sure you buy whatever Goldman/PIMCO is selling you (and use their brokers if possible) and you can do no harm.After all the ponzi has to keep growing: if and when it stops, it's all over.