10 Market Predictions From Goldman Sachs

Crysta ball wizard fortune

Photo: Sean McGrath, Flickr

Goldman’s equity team lead by David Kostin has something of a mid-year review of where the market is, where it’s going, and how it’s going to get there.Despite the selloff, Kostin still believes the S&P 500 is going higher.

This move is just a blip.

There big call on oil going higher stands, and they’re also bullish on another pair of commodities.

We’ve included their most recent projections and charts detailing their moves.

The S&P 500 is still headed to 1500 by 2012

The S&P will hit 1450 by the end of 2011, and 1500 by Q2 2012.

Source: Goldman Sachs

2012 will grow faster than 2011

U.S. GDP growth will hit 2.6% in 2011, and 3.2% in 2012.

Source: Goldman Sachs

Inflation will mostly remain pretty tame

Inflation to remain around 3.1%, with core at 1.3%, and personal consumption expenditures at 1.1%.

Wage inflation will be limited, because unemployment will not fall by much, only 9.1% to 8.3% by the end of 2012.

Home prices will keep falling, another 5% through the end of 2011.

Source: Goldman Sachs

Oil prices will rise again; gold and copper will go higher as well

Brent crude is heading to $140/barrel by the end of 2011. Gasoline prices are going to rise 11%.

Copper and gold prices will continue to rise, while cotton and corn will fall.

Source: Goldman Sachs

Interest rates won't be hiked until 2013

While interest rates won't move until 2013, the yield on the U.S. 10-year will rise from 3.0% to 3.75% by the end of 2011, and 4.25% by Q4 2012.

Source: Goldman Sachs

Energy firms will see strong sales growth in 2011 and decent growth in 2012

The energy sector will see sales growth of 27% in 2011. The overall S&P 500, excluding utilities and financials, will see growth of 10.1% in 2011 and 7.7% in 2012.

Source: Goldman Sachs

Profit margins will increase in 2011, but decline in 2012

Profit margins will expand slightly in 2011, to 8.9% for S&P 500 companies. In 2012, that will fall slightly, to 8.8%.

Source: Goldman Sachs

EPS will continue to rise, hitting $104 in 2012

In 2011, EPS for the S&P 500 will hit $96, and in 2012, $104.

Source: Goldman Sachs

Return on equity will rise in 2011, and in 2012

ROE will hit 17% in 2011, and 18% in 2012 for the S&P 500.

Source: Goldman Sachs

You should buy companies with solid revenue growth and exposure to the BRICs

Goldman Sachs recommends high revenue growth stocks and companies that sell to consumers in BRIC countries.

Source: Goldman Sachs

But why is Goldman Sachs so bullish on the energy market?

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