Goldman Cuts 2011 S&P Price Target From 1400 To 1250

Tyler Durden's picture

As usual, Goldman saves the best for last. From David Kostin: "We are cutting our year-end 2011 price target for the S&P 500 to 1250 from 1400. Our new target reflects a potential return of 5% from the current index level. Our revised price target reflects the heightened uncertainty that characterizes global equity markets today. Our earnings, dividend, and economics forecasts remain unchanged. The unstable macro environment appears likely to persist for the foreseeable future. Downside risk exists to our forecast if the European sovereign debt crisis deteriorates while upside exists if substantial progress is made in addressing the problem." And since Goldman is leaving its S&P EPS forecast untouched, this is merely a contraction in the multiple from 14 to 12.5. Now if one assumes that David Rosenberg, who earlier speculated that the real S&P EPS is closer to 75 than 96, is correct, and applies the revised Goldman multiple, that means that the S&P has about 400 points of downside. Of course all of this means that one can predict the future. Which is impossible. Which leads us to believe that today's firing of David Bianco was merely due to him refusing to play along with the revised script. Which is as follows: the banks are buying everything that their clients have to sell in advance of, you guessed QE3 in the US and more QE in the UK, Europe and Japan for one last record bonus hurrah. While we can only hope we are wrong, if we are right this means the short squeeze on the market is about to slam shut and Goldman will make out like a bandit as usual, with the S&P soaring several hundred points on ever worse macroeconomic and geopolitcal data.

From Goldman:

What has changed: A higher discount rate in our valuation model


Ten-year US Treasury yields have plunged by 100 bp to 2% since late July while the equity risk premium (ERP) increased as the European debt crisis threatened the tenuous US growth outlook. The cost of equity discount rate for our DDM rose by 40 bp to 8.7%. Every 10 bp rise in the cost of equity reduces our S&P 500 DDM-implied fair value estimate by about 30 points.


What has not changed: Earnings, dividends, and economic outlook


We continue to estimate S&P 500 operating EPS will hit a new record high of $96 in 2011 and rise by 6% to $102 in 2012. Goldman Sachs Economics forecasts 2.0% GDP growth in 2012 and only a 1 in 3 chance of a recession.


Our uncertainty-based valuation approach suggests downside risk


Our model incorporates four observable measures of market uncertainty and suggests a year-end 2011 P/E range of 9.2X-11.4X or 1025-1275. The 10.3X midpoint implies a year-end index level of 1150, 3% below today.

Full report:


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knukles's picture

Agggarh!  You mean risk premia have expanded!
Little late for this fucking revelation, no?


oobrien's picture

Holy fucking sheep shit!

This is a job for Batman, Superman, and the Green Lantern.

Unfortunately, they're currently at the Betty Ford Clinic consumed by Greek austerity stress.

What's a superhero to do?

IQ 145's picture

Have to post this somewhere so there's a public record of it; Bought one S&P 500 Long, Dec. @1182.70 at 7;04pm CT.  The chart shows an ascending wedge, higher bottoms, and control at 1200 on the top; expect a breakout.

Soul Train's picture

Yep, That is the obvious trade. Good luck.

One more greater fool theorist to join the wedge watchers trending brigade. Easy money it seems to be. Go get it.

Boston's picture

The chart shows an ascending wedge, higher bottoms

That could be a bear flag.

Central Bankster's picture

So who wants to bet if the market hits 1250, there new price target will be 14% higher 12 months out?  Also, if the market hits, 950, they will "turn neutral" and the market will produce a tradeable bear market rally?

espirit's picture

So what do they expect to receive for a runup to 1250?

A ZimBenWe Trillion dollah bill?

Yamaha's picture

No shit! Wow, I would have never thought since I stopped spending months ago along with my neighbors and those in Europe.

honestann's picture

In gold we trust.

In goldman we despise.

Everything goldman says is designed to mislead and defraud.

TruthInSunshine's picture
Mortgage Default Warnings Surged in August


By THE ASSOCIATED PRESS Published: September 15, 2011 at 12:29 AM ET

LOS ANGELES (AP) — Banks have stepped up their actions against homeowners who have fallen behind on their mortgage payments, setting the stage for a fresh wave of foreclosures.

The number of U.S. homes that received an initial default notice — the first step in the foreclosure process — jumped 33 percent in August from July, foreclosure listing firm RealtyTrac Inc. said Thursday.

Yamaha's picture

Revelations come from prophets - not the $$$ profit GS....

Peter_Griffin's picture

Lets not start dumbing down this board with theism...

Cleanclog's picture

I do hope that the longer the TBTFs manipulate the markets, the more people, authorities and other "powers" will come to understand that elite manipulation has been what actually has been happening, and in their disgusted fury remove all their business and demand and exact retribution.  Revenge if need be.  Once the anger theme really starts rolling even GS-men won't be safe.

Today's whipsaws in the final 1/2 hour likely to become more commonplace, but with fewer and fewer participants.

Bobbyrib's picture

1250? In their dreams. They're going to be lucky if it is 75% of that in two years.

candyman's picture

 I learned nothing new here, what a fucking waste of time

jdelano's picture

Shit. Bought more puts today and I think you guys are probably right. Is it kharmically ominous to pray for violent strikes in Greece?

PulauHantu29's picture

825 is my new S&P target...revised downward from 1050. Boomers will be cashing out their reitrement accounts (mainly stocks) to live on since The Bernank and Timmy are giving them 0.001% interest on their hard earned savings accounts.


alien-IQ's picture

what is t is this "uncertainty" the squid speaks of? there is no uncertainty. quite the contrary. we are all quite certain that this kleptocratic clusterfuck will continue to fuck as many people over as humanly possible until the people either revolt or are no more. there is no uncertainty.

Robslob's picture



Translation for all of you who do not understand Goldman speak:

It means we will hit 1250 before end of year (so they can be accurate / better than expected) but once that is hit...bye bye

IQ 145's picture

Gonna keep an eye on you; you may be paying attention.

Central Bankster's picture

1240-1250 is what I have been hoping for to get massively short for weeks now.  Hope my patience is rewarded.

X.inf.capt's picture


X.inf.capt's picture









BlackholeDivestment's picture

S&P 666 ...Bitchez. Lol.

Yamaha's picture

825 is minimum......

Yamaha's picture

I say 500! Any bids?

Sequitur's picture

Kostin headlines the report. Hmmm -- wasn't he the same SAT dumb hammer who predicted S&P 1500 at the beginning of this year?

hettygreen's picture

Short squeeze? Doubtful because unlike all the other teetering on the brink, stick save episodes since March '09 the professionals are now fully engaged and aggressively pressing the upcoming ugly elevator ride down button. I actually remember a time (summer of '09 was it?) that every amateur stock jockey was balls to the walls short. Sites just like this one were full of overconfident short sellers spouting all their various wave patterns and strategems. Funny but nowadays instead of uber bravado all I see among the bearish commentariat is uber caution or uber throwing in of the towel which leads me to conclude that a waterfall decline is probably dead ahead.

IQ 145's picture

try this; what's the alternative to a short squeeze ?  give all the money to the shorts? Who are basically, retail, civilians, dreamers, whatever. Does that sound good to you? It doesn't sound good to them.

SmoothCoolSmoke's picture

Usless, of course,  Goldman is already short.....or has sold a shitload of OOM calls.'s picture

More people in China driving cars....and more people in the US driving bicycles....sums it up....

buzzsaw99's picture

Now I think it will be much higher. lulz

oogs66's picture

Usually they get the direction they want first so cover shorts into a sell off since gs will be buying! Did Abby Joseph Cohen roll over in her grave?

nestle's picture

WOW damn!

When Goldman said gold was about to fly last week, the price retreated like asian ins't into gold anymore.

Now they are saying S&P is not bullish!!?? quick ppl pile on S&P!!!

machineh's picture

'Ten-year US Treasury yields have plunged by 100 bp to 2% since late July ...' and Goldman raises their equity risk premium in response?

Ludicrous! If Goldman's bad-mouthing the market, I'm buying it (just as they are, on the sly).

Think like a criminal.

Robslob's picture



Truer words have never been spoken...Congrats on your next upcoming winning trade.


Get the fuck out out may miss 20-30 S&P points up from there but spare yourself the 50 point overnight gap down the folllowing session!

scatterbrains's picture

thats like another 60+ s&P points from here..  ok let me think.. I can risk about 1000+ points downside for a chance to make about another 60 more ? duh ok that sound good to me.


IQ 145's picture

Just bought it as posted above; I'll be gone at 1240 if "the farce is with me"; otherwise I'll be paying a little less tax next year. "F" is buyable, also, in my opinion. Ford Motor Co. Major industrial that's not operating on government financing and the price is nicely hammered.

poor fella's picture

F would be buyable (to me) if they'd get that damn diesel Focus to The States. I remember when they were seriously on the brink, Mulally said they didn't see the benefit of building a diesel engine factory in Mexico because they'd have to sell 250k engines to be profitable - they would have been in the black easy by now and could have built the factory in the U.S. and been a-ok. Made good money on 'luck' thinking they would do the above, but worried about their lack of forsight on consumer 'needs' vs. 'wants' - seeing as how people are going to have trouble buying either.

kill switch's picture

Who gives a shit about goldman,,,It's all fucking insane!!!

IQ 145's picture

It's not a bit m ore insane then it ever was. look at the charts; they are a record of prices paid; so they tell you something about the market; blogs, even very nice blogs, that you really, really like, don't tell you anything about the market. The chart shows that the bottom is in and the rally is on; that's all there is. All the conversation in the world isn't going to make shorting a rallying market a good idea.

kill switch's picture

I don't care about trades / fucking charts,,the world has gone insane, delusional and dysfunctional.

Head for the tall grass,, every man for himself..


I sound extreme,,,no shit!!


Caviar Emptor's picture

The unstable macro environment appears likely to persist for the foreseeable future.

Oh you're no fun anymore, Goldie!  

You know damn well that little trivialities like the economy and profits don't move the market: it's taxpayer dollars funneled by the Fed through Wall Street bonus pools and hooker expense accounts! You and your "Macro This" and "Fundamental That" and your higher order mathematics....Ha! You had me going there for a minute......NOT!!!!

espirit's picture

Maybe someone has figured that without jobs, there are no taxpayer dollahs to float this boat.

Zero Govt's picture

Goldman Cuts 2011 S&P Price Target From 1400 To 1250

Possibly the most worthwhile (worthless) bit of news all year ...wake me up when Goldman goes bankrupt because that's just about the only bit of real news from Goldman Sucks that's worth hearing 

fdisk's picture

Goldman just look over Chart and pick first resistance

at about 1256 SPX. And with both EZ/FED QE this could be achieved

in 2 days.. :)) 14-15k (at least) by Year End, if EZ start

printing like FED, easy.. 1250???

2 more days like today and we are at the Goldman target.

f*g day traders, always talking after the fact, like Rogers:

Gold hit 1900, (he claims to take profit on Gold position)

EUR hit 1.35 (he claim to load up on Dollar to buy EUR "later")

Market drops 300 points ( he BS that he short EZ stocks, US

stocks, EM stocks).. And that's the problem, everyone just

reading charts from right to left and claiming to be a genius.

14k by End of 2011 if EZ starts printing like they should,

cause they have no other option.

Lady Heather...UNCLE's picture

EPS=96. Multiplethus =1250/96=13.02.

If EPS=75 and multiple=13.02 then S&P=976. Current market 1190. Thus 213pt correction or 17.89% correction.


fdisk's picture

NO! EPS=75 EPS is in dollar terms and if Inflation picks up, EPS will grow as well. Got it? Don't compare 2001 and 2011 bottoms.. Unless Deflation and De-levaraging breaks out, then commodities will be killed as well.


There is disproportion in S&P as well, some of the stocks are

overvalued but most are below or at 2008 lows already.