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Goldman Goes For Broke, Raises 2011 S&P Target To 1,500

Tyler Durden's picture




 

Goldman's most recently inducted partner David Kostin, who no doubt promised to make his superiors proud for promoting him, just did so this morning. The chartist has just told all clients to sell everything that Goldman is offering as Goldman has just revised its year end S&P target fo 1,500 on expectations of what we believe translates to a priced to absolute perfection, Goldilocks centrally planned economy, where Bernanke finally succeeds where he and his predecessors have failed every single time before. As an aside, and as empirically proven, those who take the other side of the Goldman sell-side trade (i.e., the same side as the Goldman prop trade, as after all it is Goldman which is selling whatever clients are buying) end up making money the majority of the time in the long-run. Keep that in mind as the S&P fails to hit the revised S&P target in 358 days.

From David Kostin

We are raising both our 2011 and 2012 S&P 500 earnings estimates by $2 per share to $96 and $106, reflecting annual growth of 14% and 11%, respectively. We boost our year-end 2011 target to 1500 representing a potential total return of 21% including the 2% dividend yield. Our 3- and 6-month interim targets are 1325 and 1400, respectively. A re-accelerating US economy will drive 8% sales growth and explains our pro-cyclical recommendations. Focus on stocks with high beta to both the US economy and the stock market and firms with rising return on equity (ROE).

We expect 2011 EPS will reach a new high 5% above the prior peak
Goldman Sachs US GDP forecasts are above consensus for 2011 (3.4% vs. 2.6%) and 2012 (3.8% vs. 3.1%). A 50 bp shift in GDP growth equals $2 per share in EPS and every 50 bp shift in profit margins equals $4 per share.

Raising our S&P 500 year-end 2011 price-target to 1500
We forecast that at year-end 2011 the nominal size of the US economy will be 5% larger than today, the level of forward EPS will be 11% higher, the P/E will have expanded by 8% or 1 point, and S&P 500 will be 19% higher.

Themes: Buy (1) Cyclicals; (2) High beta; and (3) ROE growth
Our best ideas for 2011: (1) Long Cyclicals/short Defensives; (2) Stocks with high beta to both the US economy and stock market; (3) Growth in return on equity; (4) High Sharpe ratios; (5) High dividend growth.

 

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Fri, 01/07/2011 - 09:05 | 855556 LeBalance
LeBalance's picture

And the other "other" side to that trade that maintained its value better than either side is, of course, PMs.  Because what we are talking about in recent years with the indexes (in the main) is not increasing overall corporate strength, but a dollar hedge.

Fri, 01/07/2011 - 10:43 | 855945 Fish Gone Bad
Fish Gone Bad's picture

Warren Buffet is on the hook for a bet he made that the DOW would hit 14,000 (for several billion $$$), so with all the manipulation happening, I am thinking Ben/Tim/Goldman will probably get him out of his sinkhole in payment for bailing out GE, Wells, and Goldman.

Fri, 01/07/2011 - 09:07 | 855562 youngman
youngman's picture

Well they would know if QE III and IV are going to happen.....they have the inside scoop....with all that printed cash and people bailing out of bonds..where does it go....I am still on of the 5% ers that is investing in PM´s instead....

Fri, 01/07/2011 - 09:31 | 855605 Wynn
Wynn's picture

IV sounds about right. drip, drip, drip comes the liquidity, unfortunately the patient is in a coma, and unlikely to survive.

Fri, 01/07/2011 - 09:09 | 855566 Spalding_Smailes
Spalding_Smailes's picture

And gold is monkey hammered' on the news ... 

Fri, 01/07/2011 - 09:13 | 855568 unwashedmass
unwashedmass's picture

me too, one of the fools invested in the hard stuff.....

the utter hysteria of the mainstream media over the past couple of days about "now is the time to buy stocks" has been stunning...

if ever a hand was revealed this is it....

it is beginning to dawn on the big boys that the peasantry ain't comin' back....

and...they might be stuck holding the bag.

awwwwwwwwwwwwwwwwwww

Fri, 01/07/2011 - 09:26 | 855584 Rudeger
Rudeger's picture

Don't lose faith! Just now in Mish's Global Economic
Trend Analysis

"Hello Mish,

If Italy were to go into a nominal GDP recession on account of its austerity programs, its debt-to-GDP ratio would likely be 130% by 2012. It's difficult to see how the market would ignore that.

Also check out Italy's debt compared to Germany. Here is the official EU Gross Government Debt Figures by country. Note that as of 2009, Italy's Debt is 1.763 Trillion EUR, about the same as Germany. Obviously the German economy is far bigger.

Moreover, I assure you that Italy has a lot of off-balance sheet debt. Some European countries took some very creative measures to reduce interest payments on debt. Italy was one of those countries.

I have seen Italy do HUGE (10+ billion USD) derivative transactions. Those transactions were all off-balance sheet but the cash flows behind the transactions were very real.

Italy was the number 1 customer for big investment banks in London for years. You won't find anything about that in the press.

In 2011, Italy will need to rollover a pile of debt. It will be interesting to see how that goes. I believe that if the 10-year yield hits 6%, an irreversible snowball effect similar to what Greece and Ireland went through is likely.

That's when gold hits $2000

Dr. Evil"

You can read the full analysis here,

http://globaleconomicanalysis.blogspot.com/2011/01/italy-invisible-elephant.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MishsGlobalEconomicTrendAnalysis+%28Mish%27s+Global+Economic+Trend+Analysis%29

Fri, 01/07/2011 - 09:28 | 855585 Spalding_Smailes
Spalding_Smailes's picture

I might pick up some silver wheaton at $ 20-25 ... Lol'

 

Or I'll keep buying tech & financials ... ? Nasty head and shoulders at the top of that gold chart. Turd the chart man will not like gold at 1350 new lows, ugly 4 month chart ...

Fri, 01/07/2011 - 09:31 | 855602 unwashedmass
unwashedmass's picture

 

you believe the painted chart? the chart dictated by JPM's activities? I don't. Not selling here. whoops......they didn't make their jobs "expectations"

wonder how many peasants cramer moved into the stock market for slaughter?

 

Fri, 01/07/2011 - 14:43 | 856917 Captain Kink
Captain Kink's picture

1350 is nothing.  let it go to 1300 or lower. No one here is buying for next week's move.  the market move higher should be played, on its way to dow 36,000 or whatever.  the problem with the money we make in stocks is that it won't be worth more than it is today.  Gold can and should pull back, consolidate, and then move higher as more fiat is printed.

Fri, 01/07/2011 - 10:34 | 855915 Amish Rake Fighter
Amish Rake Fighter's picture

Today is setting up to be a good final hour stinkbid fishing day for junior gold explorer/producers on the Canadian Venture Exchange.

 

Mwaha....ha...mwauahaha...hahaha....MWUUUUUUUUUUUUAHAHAHAHAHAHA !!!

 

One day my face will be on every postage stamp in the world !

Fri, 01/07/2011 - 09:11 | 855567 HelluvaEngineer
HelluvaEngineer's picture

Dang, no dips to buy on that chart.  Better just buy now, I guess.

Fri, 01/07/2011 - 09:20 | 855581 slaughterer
slaughterer's picture

Tyler,

I believe you are being a little unfair with one of our company's best equity analysts.  Compare David's S&P EOY 2010 prediction and please admit that he had one of the most accurate predictions of all analysts in the industry.  We would also like to state publicly on this forum that GS resents the implication that we trade against the clients we work hard to serve in an advisory fashion. This is simply not true if you analyze our client recommendations against our trade book.

 

Fri, 01/07/2011 - 09:23 | 855587 John Law Lives
John Law Lives's picture

Get behind us, Satan!

Fri, 01/07/2011 - 09:29 | 855603 CU1981
CU1981's picture

Since your clearly an insider, once we convert you to the "good side". We will be expecting all the juicey insider info. For the common good of humanity of course.

 

Please hang around a bit..... this shouldn't take long at all.

 

 

Fri, 01/07/2011 - 09:58 | 855749 slaughterer
slaughterer's picture

Dear CU1981,

I already work for the "good side."  Why would I want to convert?

Fri, 01/07/2011 - 13:26 | 856601 traderjoe
traderjoe's picture

Doing God's work!

Fri, 01/07/2011 - 09:34 | 855613 Red Neck Repugnicant
Red Neck Repugnicant's picture

First of all, Goldman employees have been banned (by GS) from posting here, so no one believes you.

Secondly, the fine print at the bottom of the GSCI prospectus specifically states that Goldman's proprietary traders may be in communication with those at bastards at the GSCI, and traders may place positions that run opposite to the recommendations given to GSCI clients.

This is new lingo adopted after that pesky little CDO raping. Go back to your basement. 

Fri, 01/07/2011 - 09:57 | 855738 slaughterer
slaughterer's picture

Dear Mr. Red Neck,   

1.)  GS employees have not been banned from reading and posting on financial news sites and blogs.  Only our internal E-Mails and communications have to comply with the newly-revised company communication rules.  Some of our personnel make regular replies on ZH message boards and read the articles regularly to keep themselves informed of the latest hedge perspectives--except of course the GSCI articles that ZH posts, which we already know thoroughly. 

2.)  We are prohibited by federal law to have a sizeable proprietary trading group.  The positions our small trading division might take against clients is purely fortuitous and not directed against any GSCI recommendations by calculation.     

Fri, 01/07/2011 - 10:41 | 855886 Red Neck Repugnicant
Red Neck Repugnicant's picture

You're so full of bullshit, you should have your lips surgically attached to a catalytic converter to contain the roiling miasma of methane in front of your face. 

First, ZeroHedge never talks about GSCI. I do. So for you to claim familiarity with the GSCI articles is crap.

Second, no one at GS would be posting on an internet blog 4 minutes before the market opens, unless you're in charge of Blankfein's shoes or Viniar's coffee.

Third, GS is also prohibited by law to engage in securities fraud, but because of the wonderful profits it yields, they do it anyway. 

Fourth, give me the name of the the SSG legend who bought a liquor company in SEA and which office he worked out of.  

Fifth, while not in writing, everyone knows the ZH IP address is specifically off limits.

Fri, 01/07/2011 - 12:27 | 856386 ElvisDog
ElvisDog's picture

Nicely done, RNR. You should change your login name to "Troll Killer".

Fri, 01/07/2011 - 14:24 | 856835 Hephasteus
Hephasteus's picture

Gang bang us into all truth and wisdom.

http://www.eagleforum.org/educate/1998/nov98/focus.html

Fri, 01/07/2011 - 16:05 | 857241 Red Neck Repugnicant
Red Neck Repugnicant's picture

By the way, since it's been over 5 hours and you've obviously fled the scene, the answer to the fourth question is Mark McGoldrick, who used to head the highly elusive Special Situations Group.  

There's not a person at Goldman that doesn't know goldfinger

 

Fri, 01/07/2011 - 10:39 | 855939 NewThor
NewThor's picture

How much does evil pay?

Fri, 01/07/2011 - 12:32 | 856290 Amish Rake Fighter
Amish Rake Fighter's picture

Being Blankfein's fluffer is not God's work !

Fri, 01/07/2011 - 17:24 | 857532 NewThor
NewThor's picture

 

Dear Mr. Slaughterer,

The Goldman Sachs gang are like the new Nazis.

So you might be funny and charming, but

you're still a nazi. Did you know Leni Riefensthal lived

to be 108? You want to know why? At the end of

her life, she knew God was not happy with Nazis.

Enjoy.

I hope you meet Aldo the Apache soon

 

 

 

 

 

Fri, 01/07/2011 - 09:15 | 855572 topcallingtroll
topcallingtroll's picture

Go double and triple long large cap stocks on margin accounts! Silver is topping!  Silver is topping!  Sell your silver and buy stocks before it is too late!  Remember you heard it from the troll first.

Fri, 01/07/2011 - 09:27 | 855597 Shocker
Shocker's picture

Hahaha, heard it from the troll first

Fri, 01/07/2011 - 09:14 | 855575 Sudden Debt
Sudden Debt's picture

I think they mean a 14% growth in financial toxic instruments to hide the crap.

Fri, 01/07/2011 - 09:17 | 855580 Dick Darlington
Dick Darlington's picture
Headline from Ran Squawk: 01-07 08:04: Best Buy (BBY) - Co. report December same stores sales were down 4%; reaffirm forecast for FY EPS USD 3.20 - 3.40 The xmas miracle of consumer spending just keeps giving.
Fri, 01/07/2011 - 09:18 | 855582 No Mas
No Mas's picture

Agreed.  The S&P @ 1500 is plausible with this much liquidity already in the system and I don't think the ECB/IMF has even started.  Also, gold < $1000 is also plausible.

I don't believe it will take 358 days for either to become reality.

Fri, 01/07/2011 - 13:31 | 856614 traderjoe
traderjoe's picture

Stocks will benefit from the liquidity but gold will not? Huh?

Fri, 01/07/2011 - 09:23 | 855586 101 years and c...
101 years and counting's picture

GS already has the NFP in hand....looks like a huge pump in equities in store for today.  No way NFP disappoints and stocks reflect any sort of reality on a day GS goes uber bull.

Fri, 01/07/2011 - 09:56 | 855728 CU1981
CU1981's picture

nice call

Fri, 01/07/2011 - 09:25 | 855589 CU1981
CU1981's picture

I think 1500 is conservative:

 

That last 3% of value remaining in the dollar will disappear faster than most people realize .....

 

Just saying ....

Fri, 01/07/2011 - 12:30 | 856397 ElvisDog
ElvisDog's picture

Nowhere in the GS analysis on EPS is a discussion of margin compression due to commodity price increases. Companies can only reduce package sizes so much before people will stop buying their products in disgust. If margin compression becomes a reality, the only way to reach 1500 is to push P/E ratios above 20. It might happen, but I wouldn't bet my money on it.

Fri, 01/07/2011 - 09:25 | 855591 Salinger
Salinger's picture

"On March 13, David Kostin boldy went where A. Joseph Cohen has gone so many times before, by becoming the best contrarian indicator around. To wit: "Investors we met this week remain bullish in both outlook and positioning, consistent with our view. We expect S&P 500 to rise to 1300 by mid-year (+13%), before ending 2010 at 1250 (+9%)."

 

http://www.zerohedge.com/article/david-kostins-march-13-sp-1300-june-30-...

Fri, 01/07/2011 - 09:27 | 855593 pat53
pat53's picture

Look for a 200 point move in the Dow up today.

Fri, 01/07/2011 - 09:28 | 855595 David99
David99's picture

This is the game plan

Jan. 2011 to June 2011 = Fraud Street gang will take Dow upto 13,500

June 2011 = FED will stop POMO's and Dow comes back to 10,000 -11,000 level

Sept - October 2011 = FED again comes back with QE3, higher POMO's

Nov - Dec. 2011 = Fraud Street gang again jacks up the Casino to 13,500 and gets yearly bonus in billions

Main Street ( 98% slaves) will get food stamps

Fri, 01/07/2011 - 09:29 | 855600 RobotTrader
RobotTrader's picture

AIG up to new highs again pre-market.

Gold stocks obliterated, all the dip buying monkeys are being sent to the slaughterhouse.

Looks like we are seeing some rotation into the Homebuilders, KBH up big pre-market.

Fri, 01/07/2011 - 09:55 | 855724 bobert
bobert's picture

You've a skin of teflon to post like that here.....

Fri, 01/07/2011 - 11:38 | 856150 unununium
unununium's picture

A man will do very disagreeable things when paid to do them.

Fri, 01/07/2011 - 12:32 | 856410 ElvisDog
ElvisDog's picture

Umm, as of 8:33 PST, gold prices are up a few dollars. We must have different definitions of "obliteration"

Fri, 01/07/2011 - 09:30 | 855601 onlymyopinion
onlymyopinion's picture

My target for new ATH's on the SnP's is EOY2012.  I guess GS knows a bit more than me--LOL.  Must remind myself to buy more dips.

Fri, 01/07/2011 - 09:31 | 855610 RobotTrader
RobotTrader's picture

Futures dropped on the news.

But BAC only down a paltry 2 cents and AIG is up $1.60

Fri, 01/07/2011 - 09:58 | 855729 bobert
bobert's picture

Yeah, but where is your moral compass? Can you really suggest owning

BAC and AIG???

Fri, 01/07/2011 - 09:33 | 855614 goldmiddelfinger
goldmiddelfinger's picture

Is this the same nitwit calling for a 588,000 payroll gain for December?

Fri, 01/07/2011 - 09:32 | 855616 Robslob
Robslob's picture

September 2010...yup...inverse world now makes sense:

 

Goldman Releases Most Bearish 2011 Outlook Presentation Yet, Sees S&P In 725-800 Range In QE2 Case

Goldman’s Investment Strategy Group has just circulated the most bearish 2011 outlook presentation, detailing why the US economy in 2011 will likely stall and post negative growth. As the chart below demonstrates, the current case, where ongoing QE will likely persist through 2011 and even into 2012, and thus make any discussion of raising rates irrelevant (likely forever, as the Fed will not be able to absorb all the excess slack before it is forcefully removed after 2-3 sequential dollar devaluations) lead Goldman to a GDP expectation of well under half of the Fed’s greenshooty outlook of 3%.

 

http://www.goldmansucs.com/2010/09/28/goldman-releases-most-bearish-2011...

Fri, 01/07/2011 - 09:35 | 855624 jus_lite_reading
jus_lite_reading's picture

Goldman indeed has the worst analysts in the world but I appreciate the effort. If his conslusion is that inflation is the driving force, he's got my vote. If not, get lost.

Fri, 01/07/2011 - 09:58 | 855741 bobert
bobert's picture

12/31/2011 S&P 500 = 1390

Fri, 01/07/2011 - 10:25 | 855875 lbrecken
lbrecken's picture

when are these useless OBAMA PM lackies going to stop paying the immoral GS bastards?  I guess when they become conservatives.....

Fri, 01/07/2011 - 10:29 | 855888 ageofreason
ageofreason's picture

I also noticed that the Golman chart is straight up through the year with no losses....

 

AIN'T DAT SPECIAL!

Fri, 01/07/2011 - 10:30 | 855896 Kina
Kina's picture

An S&P up 15% probably means USD purchasing power down 15%

 

But of course they have to hope the sticky tape, glue and paper clips can hold it all together for that long....and some of those birds dropping dead from the sky might be black swans, seems to be a lot of them about.

 

Fri, 01/07/2011 - 10:34 | 855908 M.B. Drapier
M.B. Drapier's picture

Jim O'Neill agrees, no surprise.

Fri, 01/07/2011 - 10:45 | 855960 jean luc jean
jean luc jean's picture

Why trust anything these criminals say?  They have their hands all over the market and inside our government halls.

 

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