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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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Wed, 09/14/2011 - 19:24 | 1670959 knukles
knukles's picture

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


Wed, 09/14/2011 - 19:43 | 1671029 oobrien
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?

Wed, 09/14/2011 - 20:20 | 1671174 IQ 145
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.

Wed, 09/14/2011 - 21:10 | 1671359 Soul Train
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.

Wed, 09/14/2011 - 21:39 | 1671452 Boston
Boston's picture

The chart shows an ascending wedge, higher bottoms

That could be a bear flag.

Wed, 09/14/2011 - 21:17 | 1671393 Central Bankster
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?

Wed, 09/14/2011 - 23:08 | 1671706 espirit
espirit's picture

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

A ZimBenWe Trillion dollah bill?

Wed, 09/14/2011 - 19:24 | 1670973 Yamaha
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.

Wed, 09/14/2011 - 19:26 | 1670975 honestann
honestann's picture

In gold we trust.

In goldman we despise.

Everything goldman says is designed to mislead and defraud.

Thu, 09/15/2011 - 00:33 | 1671950 TruthInSunshine
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.

Wed, 09/14/2011 - 19:26 | 1670980 Yamaha
Yamaha's picture

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

Thu, 09/15/2011 - 02:23 | 1672116 Peter_Griffin
Peter_Griffin's picture

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

Wed, 09/14/2011 - 19:29 | 1670989 Cleanclog
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.

Wed, 09/14/2011 - 19:29 | 1670991 Bobbyrib
Bobbyrib's picture

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

Wed, 09/14/2011 - 19:30 | 1670995 candyman
candyman's picture

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

Wed, 09/14/2011 - 19:36 | 1671019 augie
augie's picture


there is something new you probably haven't heard about. 

Wed, 09/14/2011 - 19:34 | 1671011 jdelano
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?

Wed, 09/14/2011 - 19:36 | 1671013 PulauHantu29
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.


Wed, 09/14/2011 - 19:35 | 1671017 alien-IQ
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.

Wed, 09/14/2011 - 19:36 | 1671020 Robslob
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

Wed, 09/14/2011 - 20:31 | 1671214 IQ 145
IQ 145's picture

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

Wed, 09/14/2011 - 21:20 | 1671403 Central Bankster
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.

Wed, 09/14/2011 - 19:38 | 1671023 X.inf.capt
X.inf.capt's picture


Wed, 09/14/2011 - 20:19 | 1671160 X.inf.capt
X.inf.capt's picture









Wed, 09/14/2011 - 19:37 | 1671024 BlackholeDivestment
BlackholeDivestment's picture

S&P 666 ...Bitchez. Lol.

Wed, 09/14/2011 - 19:37 | 1671025 Yamaha
Yamaha's picture

825 is minimum......

Wed, 09/14/2011 - 19:39 | 1671034 Yamaha
Yamaha's picture

I say 500! Any bids?

Wed, 09/14/2011 - 19:40 | 1671040 Sequitur
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?

Wed, 09/14/2011 - 19:45 | 1671057 hettygreen
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.

Wed, 09/14/2011 - 20:35 | 1671237 IQ 145
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.

Wed, 09/14/2011 - 21:12 | 1671374 SmoothCoolSmoke
SmoothCoolSmoke's picture

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

Wed, 09/14/2011 - 19:49 | 1671072's picture

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

Wed, 09/14/2011 - 19:52 | 1671089 buzzsaw99
buzzsaw99's picture

Now I think it will be much higher. lulz

Wed, 09/14/2011 - 19:58 | 1671108 oogs66
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?

Wed, 09/14/2011 - 19:59 | 1671112 nestle
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!!!

Wed, 09/14/2011 - 20:02 | 1671122 machineh
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.

Wed, 09/14/2011 - 20:08 | 1671138 Robslob
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!

Wed, 09/14/2011 - 20:17 | 1671165 scatterbrains
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.


Wed, 09/14/2011 - 20:25 | 1671190 IQ 145
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.

Thu, 09/15/2011 - 00:02 | 1671862 poor fella
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.

Wed, 09/14/2011 - 20:17 | 1671127 kill switch
kill switch's picture

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

Wed, 09/14/2011 - 20:27 | 1671195 IQ 145
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.

Wed, 09/14/2011 - 21:25 | 1671415 kill switch
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!!


Wed, 09/14/2011 - 20:04 | 1671129 Caviar Emptor
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!!!!

Wed, 09/14/2011 - 23:15 | 1671732 espirit
espirit's picture

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

Wed, 09/14/2011 - 20:08 | 1671139 Zero Govt
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 

Wed, 09/14/2011 - 20:11 | 1671145 fdisk
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.

Wed, 09/14/2011 - 20:12 | 1671152 Lady Heather...UNCLE
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.


Wed, 09/14/2011 - 20:24 | 1671178 fdisk
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.

Wed, 09/14/2011 - 20:21 | 1671177 Robslob
Robslob's picture

You missed the 200 S&P up part first...then do the 400 down...

Wed, 09/14/2011 - 20:22 | 1671180 Cult of Criminality
Cult of Criminality's picture

Ah ....Goldman Sachs....part of the Cult

They are very good at stabbing their own customers in the back because,they cannot face them.Matter of fact they are one reason I chose my name....they are a reflection of what I have to see everyday.

 The Cult of Criminality

Wed, 09/14/2011 - 20:23 | 1671182 CapitalistRock
CapitalistRock's picture

When discussing the EU, what the heck does "progress in addressing the problem" even mean? This is nonsense. PIIGS are bankrupt. What complete BS.

Buy gold, a shovel, and concrete. Seriously.

Wed, 09/14/2011 - 20:28 | 1671198 fdisk
fdisk's picture


Ever saw how commodities crash looks like?

Check it out:

Wed, 09/14/2011 - 20:26 | 1671191 Robslob
Robslob's picture

This is the last hurrah for 2 prepared for an INSANE PUMP BEFORE THE LAST DYING SCREAM...

Wed, 09/14/2011 - 20:28 | 1671199 caerus
caerus's picture

no way

Wed, 09/14/2011 - 20:50 | 1671295 gigeze787
gigeze787's picture

Where is A. Joseph Cohen?

Wed, 09/14/2011 - 20:50 | 1671298 gigeze787
gigeze787's picture

Where is A. Joseph Cohen?

Wed, 09/14/2011 - 20:59 | 1671326 slewie the pi-rat
slewie the pi-rat's picture

abby rode is not 2B found on the sergeant peckerZ al-bum?

Wed, 09/14/2011 - 20:52 | 1671305 slewie the pi-rat
slewie the pi-rat's picture

S&P "forward earnings" = 1/2 BiChFlation rate

got PMs, cash, and supplies?

do your betting @ casinos, tracks, card tournaments, and table games; cash; have fun!  don't play w/ the rent; hunker in da bunker;  remember civil defense?  now we have economic defense = o-u-t = civil defense.  trust me

criminals & their clients are soon parted

econom outlook?  gamma, delta, sphintor-r-r-riffic!

Wed, 09/14/2011 - 21:30 | 1671426 Johnny Lawrence
Johnny Lawrence's picture

Amazing that these assholes get paid for this.  Did they just realize that "the unstable macro environment appears likely to persist for the foreseeable future?"

Wed, 09/14/2011 - 21:36 | 1671442 IMA5U
IMA5U's picture

more traps for the bears to get short squeezed


here's the playbook: get short at the end of the month

cover your short

take a step back or get long after a few red days to begin the month

watch the rumor/rhetoric mill begin to churn

govie speeches/meetings/fed in 2nd half of month

wait till end of month to reset shorts

rinse lather repeat

Wed, 09/14/2011 - 22:12 | 1671515 sheeple2012
sheeple2012's picture

give it about a month before they unleash Joseph Abby Cohen with a year-end 2012 target of 1550, for which he, i mean she, will never be held accountable, just like his predictions for 2008, 2009, 2010, and 2011

Thu, 09/15/2011 - 02:40 | 1671621 monmick
monmick's picture

I can't believe for one minute that "Comical Abby" has signed off on this...

Wed, 09/14/2011 - 22:50 | 1671654 The Axe
The Axe's picture

when you see the towel thrown in....its time to buy   I bot AAPl this Monday and CMI   long stmp,ups, hes. cetv gmcr and cat     huge week.   US companies are lean mean and cash machines....ZH and Tyler have had the GOLD right....BIG right....but these cash rich cash flow companies will do better then gold...

Wed, 09/14/2011 - 22:50 | 1671655 The Axe
The Axe's picture

when you see the towel thrown in....its time to buy   I bot AAPl this Monday and CMI   long stmp,ups, hes. cetv gmcr and cat     huge week.   US companies are lean mean and cash machines....ZH and Tyler have had the GOLD right....BIG right....but these cash rich cash flow companies will do better then gold...

Wed, 09/14/2011 - 23:33 | 1671773 drivenZ
drivenZ's picture

Holy shit, sound the alarm bells everyone. Are these guys serious? Might as well just have waited til December to make the change. Or perhaps this isn't the last,I can see it now...

"As of today, Dec 29th 2011, we're reducing our 2011 S&P target to 950 in light of the fact that the S&P is now trading at 951. We've also updated the ERP in our model due to the increasing risk that we don't know what the fuck we're talking about."

Thu, 11/17/2011 - 04:14 | 1886010 ytpl22
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