HedgeFundLIVE.com — Some commentary from Goldman Sachs on the global markets. Note that Goldman downgraded their US growth forecasts last Friday and assumed a slightly more negative outlook for the first time this year.
– Steep corrections in commodities and FX that we saw last week are a reminder that even strong fundamental stories are susceptible to large sell offs if they rally to levels that are higher than the underlying picture deems them to be trading at.
– Softer growth has been suggested by macro indicators: sharp decline in Philly Fed for April, coming in at 18.5, well below the prior March number of 43.4; continuing downtrend in home prices; rising initial jobless claims for three consecutive weeks.
– Concerns around European sovereign crisis have resurfaced, weighing on the European bourses. Reports of potential Greek restructuring and the downgrade to Greek debt have been a hit to European banks in particular as well as credit.
– Corporate earnings have been strong for the most part this quarter.
– Friday’s Nonfarm Payrolls were rather bullish.
– Falling bond yields, lifts in the equity markets, and the decline in the dollar are clues as to what has been the driving forces behind the markets recently.
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