Silver Report Uncut
Feb 15, 2022
Goldman’s most bearish warning we have heard from him ever since he forecast back in March 2020 that the S&P could crash to 2000, which of course bottom-ticked the market. According to the Goldman strategist, “uncertainty abounds regarding the path of inflation and Fed policy. We believe two-sided risks exist to our baseline S&P 500 forecast, but with a larger downside tail.”
Kostin considers three alternative scenarios.
If inflation remains high and prompts continued Fed hiking that lifts the terminal funds rate well beyond the market and our economists’ estimates, we expect thecost of equity would rise on net and the S&P 500 would decline by 12% to 3900.
Alternatively, if inflation recedes by more than expected this year and results in fewer Fed hikes, we expect the cost of equity would fall and the S&P 500 would riseby 24% to 5500.
Finally, if the US economy tips into a recession –a question which Goldman’s investors have increasingly been asking –the typical 24% recession peak-to-trough price decline would reduce the S&P 500 to 3600.
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