This page has been archived and commenting is disabled.

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

Tyler Durden's picture


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%.

Here is how Goldman describes the its across the board outlook revision:

  • Lower growth: We expect GDP to grow 1.5-2.5% in 2011 (down from 2.5-3.0%). Our view is that the growth baton will be passed successfully from inventories and government spending to consumption and investment so growth should remain positive over the next 12-18 months.
  • Higher uncertainty: Our forecast range for GDP is wider (1% instead of 0.5%) at 1.5-2.5%
  • Lower rates: We are lowering our long-term rates forecast to 3.0-3.75% by end 2011 (from 3.75-4.25%).

And according to the "Bad Case" which the Fed is about to enact, Goldman sees a fundamental S&P valuation range of 725-800 based on 10-11x multiples:

It is all about to get very interesting.

Full presentation.



- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Tue, 09/28/2010 - 11:24 | 610191 bugs_
bugs_'s picture

Could Goldman be right this time?

Tue, 09/28/2010 - 11:24 | 610192 99er
99er's picture

Chart: DX

Did someone say "Dollar devaluation"?


Tue, 09/28/2010 - 11:33 | 610229 Chemba
Chemba's picture

Uhhm, Goldman was right last time.  Remember?  Goldman was only bank that made money right through the financial crisis and one of only banks that managed risk well enough to avoid blowing up.

Goldman should be congratulated and praised, not villified.  The morons at Countrywide, Wamu, Citicorpse, etc. should be villified

Tue, 09/28/2010 - 11:48 | 610278 Red Neck Repugnicant
Red Neck Repugnicant's picture

One venti caffe latte and a croissant.


Tue, 09/28/2010 - 11:49 | 610292 Voluntary Exchange
Voluntary Exchange's picture

I think you are somehow forgetting the huge booty Goldman managed to extract from the American people via government and then quickly dumped the loot to all their happy henchmen?

Tue, 09/28/2010 - 11:53 | 610304 Ripped Chunk
Ripped Chunk's picture


Tue, 09/28/2010 - 12:27 | 610431 Dollar Bill Hiccup
Dollar Bill Hiccup's picture

Hmmm. I believe that the US Govy paid GS 100 cents on the dollar for their AIG exposure, to the tune of $10bn ...

Managing Hank, maybe.

Disclaimer : Long GS.

Tue, 09/28/2010 - 13:21 | 610607 Spalding_Smailes
Spalding_Smailes's picture

Remember?  Goldman was only bank that made money right through the financial crisis and one of only banks that managed risk well enough to avoid blowing up.


The great Goldman' ...and the ivy league morons that infest that shit hole would all be flip'n burgers if not for the backstop of joe six pack. Most of the G'7 banking industry is totally insolvent,caput,mark'd to fantasy... your god credit/debt is on his fucking death bed. How long can Uncle Ben Sholom Bernankruptcy and the rest, keep the foundation of sand intact.. "the pillars of ponzi". Its over bud ... Good luck.

Tue, 09/28/2010 - 11:37 | 610250 BobWatNorCal
BobWatNorCal's picture

"Could Goldman be right...?"
Unlikely. Time to go all in! :)

Tue, 09/28/2010 - 11:47 | 610284 ZeroPower
ZeroPower's picture

GS is always right - assuming a contrarian view.

Tue, 09/28/2010 - 12:22 | 610401 Sucks_to_be_Smart
Sucks_to_be_Smart's picture

In all honesty, from the 2 slides you posted up, this is pretty shitty.  Obviously i can't read the entire presentation, it is NA for me but these two slides are simple SWAGs.  "oh uh... if things go well what happens to headline cpi?  its gonna be up, above 1.25% y/y.  No shit sherlock."  "oh uh... if things don't go so well what happens to 10 yr yields?  probably under 3%.  Wowww really?  did you have to plug a lot of variables into a multi-variate regression for that? or did you just sorta squint at what its been doing for the last 3 months...



Tue, 09/28/2010 - 13:51 | 610696 goodrich4bk
goodrich4bk's picture

Yup, the guys in the paint department at Sears could have done exactly the same chart for a whole lot less money.  GS' "analysis" is nothing more than "good, better, best".

Tue, 09/28/2010 - 12:23 | 610409 RichardENixon
RichardENixon's picture

Flip a coin. Consult a Quji board. Read some chicken entrails. Listen to Goldman. Six of one half a dozen of the other.

Tue, 09/28/2010 - 13:18 | 610604 406analyst
406analyst's picture

ZH bashes GS when they are late to the party (or miss the party all together), but when anything comes out in favor of their thesis, time to hop on the wagon!   

I love this site, but gimme the facts! less spin please

Tue, 09/28/2010 - 13:38 | 610662 NOTW777
NOTW777's picture

well GS president tells his followers to double down on failure and destruction and to "buck up."  the new catch phrase - from hope and change to summer of recovery to "buck up"

MSM media still fails to report the truth on this disaster

Tue, 09/28/2010 - 11:27 | 610198 pamriallc
pamriallc's picture

own a big portfolio of everything, go back to sleep

Tue, 09/28/2010 - 11:28 | 610201 Threeggg
Threeggg's picture

All markets about to go green !

Houston ........... "Go with throttle up" !



Tue, 09/28/2010 - 11:30 | 610214 HedgeFun
HedgeFun's picture

Don't you see.  The answer is in front of you all this man, gold

Tue, 09/28/2010 - 11:30 | 610219 deadparrot
deadparrot's picture

Just talking their book. Joe Retail, please short this market so we can cover at a profit.

Tue, 09/28/2010 - 11:33 | 610233 MarketTruth
MarketTruth's picture

Umm, Huston we have a problem...

Tue, 09/28/2010 - 11:37 | 610251 RobotTrader
RobotTrader's picture

Goldman PigMen turning bearish?

That's a green light to go long in a big way.

Tue, 09/28/2010 - 11:42 | 610263 Seer
Seer's picture

Yeah, and I heard that casinos have payout as well...

Tue, 09/28/2010 - 12:25 | 610415 RichardENixon
RichardENixon's picture

Not to mention the Prime Rib specials.

Tue, 09/28/2010 - 12:15 | 610372 RmcAZ
RmcAZ's picture

“The next 10 years are going to be just as good as the 1990s. The problems in this current environment we think are so different, and so new and so unique. It’s the same stupid old normal we’ve always had. We’ve got a great future.” - Ken Fisher

I feel bad for anyone investing with this guy. Actually, no, I don't.

Tue, 09/28/2010 - 11:38 | 610252 Bankster T Cubed
Bankster T Cubed's picture

GS can go f*** itself.  too little too late.

Tue, 09/28/2010 - 12:06 | 610345 Bankster T Cubed
Bankster T Cubed's picture

whoever junked me on this - I junk you back

GFS is a threat to humanity

Tue, 09/28/2010 - 11:39 | 610258 Turd Ferguson
Turd Ferguson's picture

Man, the dollar is absolutely in the fucking toilet. Just plain old ugly.

77 USDX here we come. From there, re-visit the Dec09 lows around 72.

Tue, 09/28/2010 - 11:47 | 610283 Pladizow
Pladizow's picture

From your mouth to god, sorry goldman's ears!

Tue, 09/28/2010 - 12:25 | 610416 carbonmutant
carbonmutant's picture

And the EU is howling... this is not something they can afford if they want to sell anything for Christmas.

Tue, 09/28/2010 - 11:40 | 610260 Seer
Seer's picture

Growth to stall?  Growth to be negative?  No, say it ain't so!

Geez, I've been calling this for a long time.  Only a blind, deaf and dumb person couldn't figure this one...

Tue, 09/28/2010 - 14:23 | 610786 FEDbuster
FEDbuster's picture

The presentation is too optimistic.  Third quarter 2010 GDP will be announced under 1% and revised to around zero.  By Q4 2010 we should be back in negative numbers on the announcement and continue to be revised downward. 

The wild card is how far the FED can push the market up and what effect the elections will have on the "mood" of the public.  Since the public seems to have said a collective "fuck you" to the stock market, the election results may not matter too much.  The only ones left at the craps table are the FED, HFT computers, Hedge Funds and Daytraders.

The real economy is fading while on life support.  Another shot of addrenaline (QE, stimulus, etc..) will not have as much effect as the first ones did. 

The real estate bubble created a credit and employment boom, now that real estate is dead there are no good bubbles left to blow up.

Tue, 09/28/2010 - 11:40 | 610261 Careless Whisper
Careless Whisper's picture

anyone who took the time to read that report must go to the front of the class and write 1,000 times on the blackboard:

GoldmanSachs is a hedge fund.


Tue, 09/28/2010 - 11:41 | 610262 MrTrader
MrTrader's picture

All markets green. Very good. Do we have enough idiots on board believing actually QE II ? Yeah ? Very good. While the hedge fund herd is buying deep OTM puts. Must be coincidence...

Tue, 09/28/2010 - 11:47 | 610280 The Axe
The Axe's picture

How can you even CARE!!!  Goldman wouldn't tell you a think of value or trustworthy..In a world where a stock flash crashes every day,,,even AAPL drops from 292 to 275 in a few computers freeze...its full-medal-jacket nuts.....let them take the market to WHATEVER...

Tue, 09/28/2010 - 11:48 | 610287 vote_libertaria...
vote_libertarian_party's picture

690 S+P in 2010?  As in the next 95 days?



Tue, 09/28/2010 - 11:50 | 610293 RobotTrader
RobotTrader's picture

Manical dip buying in AAPL.

Hard to say which item is stronger....

Uncle Gorilla's TIPs or AAPL?


Tue, 09/28/2010 - 11:50 | 610295 99er
99er's picture

Chart: DX

Hey, Timmy...remember the students at Peking University? The laugh heard around the world.

Tue, 09/28/2010 - 11:52 | 610299 Caviar Emptor
Caviar Emptor's picture

Goldman trying to activate Bernanke put. Or rather, Bernanke short iron butterfly where their bets pay off whether the economy drops or rises, but lose if everything stands still. 

Count on dollar pummeling to continue unfettered. Yields will be measured on negative log scale. And everybody's buying power will be crushed by inflating cost of living with deflating assets.

Tue, 09/28/2010 - 14:47 | 610831 Fast Twitch
Fast Twitch's picture

+ 1

Tue, 09/28/2010 - 11:59 | 610332 gwar5
gwar5's picture

Wonder if Abbey Joseph is more negative now, or was just too positive in the past? 

I would not be  surprised if the S & P fell further than they predict, though some of their profits come from over seas.

Tue, 09/28/2010 - 12:10 | 610358 RobotTrader
RobotTrader's picture

PigMen on Wall St. must be killing it.  And buying $300 handbags for their mistresses.

Believe it or not, COH is within a hairsbreadth of 52-week highs.

Tue, 09/28/2010 - 12:23 | 610411 rapacious rachel wants to know (not verified)
rapacious rachel wants to know's picture

how does one upload images?

Tue, 09/28/2010 - 12:38 | 610464 Careless Whisper
Careless Whisper's picture

and TIF is just a silver heart necklace away from an all-time high.


Tue, 09/28/2010 - 16:42 | 611202 Bear
Bear's picture

Forget it ... Only Robo has the good stuff

Tue, 09/28/2010 - 12:15 | 610374 LoneCapitalist
LoneCapitalist's picture

Please excuse my ignorance, but how can treasury yeilds be so low, while dollar index is also dropping? Isnt this contradictory?

Tue, 09/28/2010 - 12:20 | 610393 Cognitive Dissonance
Cognitive Dissonance's picture

Manipulation and distortion extraordinaire.

Tue, 09/28/2010 - 12:26 | 610424 LoneCapitalist
LoneCapitalist's picture

Buying our own bonds makes it look like there is a demand for dollars, while the dollar index tells the true story. Is that what youre saying?  Thanks

Tue, 09/28/2010 - 13:07 | 610559 goldsaver
goldsaver's picture

In addition, we are in the opening phases of a currency war. Other countries are buying the dollar in order to devalue their own currencies against the dollar. They believe that a strong dollar will keep prices of their goods lower in the US and spur imports into the US. Sadly, they have miscalculated the market. There can be no increased demand without increased consumer income/credit/confidence.

Wed, 09/29/2010 - 00:56 | 611891 StychoKiller
StychoKiller's picture

Okay, so everyone is buying Dollars (FRNs), yet it drops against the yen.  Por que??

Tue, 09/28/2010 - 12:17 | 610383 scratch_and_sniff
scratch_and_sniff's picture

Its all been about to get very interesting for longer than i can remember now. Meanwhile, just stay long.

Tue, 09/28/2010 - 12:18 | 610384 99er
99er's picture


(Reuters) - The upcoming flash crash report will show that regulators have a "very deep understanding" of the marketplace, giving the public a measure of confidence, the head of the Securities and Exchange Commission said on Monday.

Tue, 09/28/2010 - 12:21 | 610398 Cognitive Dissonance
Cognitive Dissonance's picture


Any time you have your head well up your ass, you have a "very deep understanding" of your anal track.

Just sayin', show me the difference.

Tue, 09/28/2010 - 12:29 | 610438 gookempucky
gookempucky's picture

So tru CD

Many of the pigs to slaughter just dont understand that the mind is like a parachute- if it doesnt happen to open-- its too late.


Wed, 09/29/2010 - 00:58 | 611893 StychoKiller
StychoKiller's picture

"Minds are like parachutes -- just because you've lost yours does not mean you can borrow mine!" -- Demotivational Poster

Tue, 09/28/2010 - 12:31 | 610442 Pillage
Pillage's picture

Goldman's Abby said it's time to buy. Still wanna buy some contrarians?

Tue, 09/28/2010 - 12:40 | 610474 Buttcathead
Buttcathead's picture

I aint buy'n nuttin !  Tim Geithner is insane, the boy has lost his fricking mind.

Tue, 09/28/2010 - 12:45 | 610493 carbonmutant
carbonmutant's picture

Nobody in their right mind would have taken the job.

Tue, 09/28/2010 - 12:42 | 610486 carbonmutant
carbonmutant's picture

Ummm... There seems to be a plan here...

American products are going to be cheaper, just for the holidays... which means that manufacturers will sell more.

It looks like a plan to improve the deficit.

Tue, 09/28/2010 - 12:56 | 610528 rapacious rachel wants to know (not verified)
rapacious rachel wants to know's picture

silver at 21.70, gold at 1310

they have 35 minutes to put the fire out

Wed, 09/29/2010 - 00:59 | 611895 StychoKiller
StychoKiller's picture

Not as long as WE keep throwing on the gasoline...

Tue, 09/28/2010 - 13:23 | 610618 maynard
maynard's picture

You people are unreasonably pessimistic. I mean none other than Jeffrey Hirsch argues the Dow will hit 38,820 by 2025! Ya'll can keep buying gold and that other yellow stuff, Dow 36K here I come!!!





Tue, 09/28/2010 - 13:30 | 610635 tempo
tempo's picture

There seems to be four alternatives to our economic problems. Raise taxes(not likely); cut spending (even less likely); trade war with China (even less likely) or a massive expansion of the FED balance sheet (QE2) (likely).   No one understands dollar devaluation and it may not hurt much if China ties its currency to the US dollar.  EU and the rest of world gets screwed.   QE2 will work for maybe a year but by 2012, the real serious problems will cause trade and possibly other wars.  Thankfully the US carries a big bad stick.  Maybe the brilliant ones know that war is inevitable and thats the reason for the massive spending levels.   Spend now while the dollar has some value.   Obama may be really smart.

Tue, 09/28/2010 - 13:49 | 610660 bada boom
bada boom's picture

This comes from the same company that predicts QE is coming in nov, dec or jan.

They have their most likely scenario for s&p 2010, 1150 to 1225, at 60%.  

To add, their worst case scenario for 2010 is only at 15% chance of occurring.

This is a major contradiction. 



Tue, 09/28/2010 - 14:01 | 610727 digalert
digalert's picture

Uh oh, Rush just mentioned ZH!

Tue, 09/28/2010 - 14:14 | 610766 CU1981
CU1981's picture

A LARGE smile came across my face when I heard Rush mention zerohedge ...LOL


Made my day !!



Tue, 09/28/2010 - 14:09 | 610749 prophet
prophet's picture

Nice work, but many already see range of 960 to 1280 with overshoots in place for a while now.  One of the less interesting indices anyway. 

Could not find any mention of "US economy in 2011 will likely stall and post negative growth" anywhere in the report other than a mention that one negative quarterly print would be historically normal.

Are we becoming sensationalist?


Tue, 09/28/2010 - 14:14 | 610767 topshelfstuff
topshelfstuff's picture

But...what about a 50 cent Dollar S&P

In just the past few months the USD [Index] has shed about 12% off its 88.70 2010 High,  equal to about 1,300 DOW Points, 100+ S&P Points

Though my two "Best Guess"'s is 1) Simply move the Decimal Point, a 10 cent dollar, or

2) Par with the renmimbi, currently about 15.5 cents

Tue, 09/28/2010 - 15:13 | 610915 Hunch Trader
Hunch Trader's picture

Market's been going up ever since Goldman begun turning out bearish pieces end of August...


Wed, 09/29/2010 - 01:04 | 611900 StychoKiller
StychoKiller's picture

Granted the Fed is "Pushing on string", but a better metaphor might be that their hook is caught on a large snag (world-wide debt level), they keep paying out line and pulling, trying to land the "big one" -- until the line breaks, and whips around the deck killing everyone in its path.  In case no one gets it, this ain't gonna end well!

Wed, 09/29/2010 - 06:37 | 612089 bada boom
bada boom's picture

I like the pushing on a string analogy.  You can push on a string, it distorts itself, but moves in the direction you want.  However, once you are done, you have a pile twisted string that needs to be sorted out. 


Thu, 09/30/2010 - 06:15 | 614978 cw2192
cw2192's picture

just read the presso and its actually pretty bullish on equities.

gs is saying that as long as gdp growth > 0, which they think it will be, equities will rally. 

i dont understand how tyler links (by the way the red highlighting is not in the original) the goldman worse case scenario to the fact that qe2 is the trigger for it. 

i dont really care if gs is bullish or bearish, its not my thing to trust any research, but it kinda makes me wary to think why TD/ZH are being deliberately misleading with their headline.


Tue, 11/16/2010 - 10:22 | 730505 daniel
daniel's picture

i love zerohedge policy cheap hosting

Do NOT follow this link or you will be banned from the site!