"Our positive 2013 outlook for S&P 500 has played out much faster than we expected." That is how the latest equity update from Goldman Sachs, which until today had an S&P target of 1625 for the year end S&P, begins. And, logically, the only option for Goldman is to hike its outlook even more, because not even the Squid apparently could anticipate how quickly the policy it forced down the throats of central banks around the world, levitated markets to surpass its old price targets. The result is David Kostin (who until December had foreseen 1250 on the S&P for the end of 2012) and company were forced to goalseek even higher targets based on tried and true excel model fudging exercises, and such "value" creation as multiple expansion and dividend payments.
To wit: "Our earnings estimates remain unchanged but we raise our dividend estimates and index return forecasts for 2013 through 2015. We expect S&P 500 will rise by 5% to 1750 by year-end 2013, advance by 9% to 1900 in 2014, and climb by 10% to 2100 in 2015. Our 2013 return implies a year-end P/E of 15.0x, a one multiple point premium to our fair-value estimate. We forecast dividends will rise by 30% during next two years. Dividend yield is likely to stay around 2%, in line with the 20-year average." For the record, Goldman had previously seen 1,900 in 2015. And now it sees another 200 points of value due to the magic of multiple expansion. That anyone can even pretend to forecast what happens three years into the future at a time when the central banks are injecting $160 billion (and soon $200 billion), and most likely will have to slowdown and halt such liquidity injection resulting in untold stock market carnage, is so beyond commentary we will leave it hanging for the ridiculous statement it is.
As for 2013, at least Goldman leave out any mention of 2013 consensys earnings... for good reason:
So in lieu of early Tuesday humor, here is how Goldman achieves its "target forecasts." All we can conclude from this is that neither Tepper nor Goldman are anywhere near done selling to muppets.
But don't for a second think any of this is earnings driven. As we showed last night, it isn't. It is all based on prayer that Bernanke and his central planning magicians can keep on expanding the increasingly meaningless PE multiple, which incidentally would collapse if and when rate were to go back to historical levels now that corporate debt is at unseen before levels.
We would spend a few more second reading this drivel, but we have better things to do. Anyone fascinated by wasting time with paperweight is urged to do so on their own.