Photo: AP Images
You’ve got to be kidding us, Goldman Sachs.In recent weeks, at least four different strategists from Goldman Sachs (honestly we’ve lost count) have offered different opinions on the direction of the stock markets. They range from extremely bullish to uber bearish.
You may be familiar with the names: David Kostin, Jim O’Neill, Abby Joseph Cohen, and Peter Oppenheimer. (More on them later.)
If you’re a Goldman client struggling to keep track of all of the opinions, then you probably started ripping your hair out when you picked up today’s Wall Street Journal and read this on page B6:
With corporate earnings growth slowing in the U.S. and fresh fears of a European meltdown, some strategists say stocks are due for a rough stretch.
“There’s a lot of uncertainty out there, so the S&P shouldn’t be trading at a premium,” says Stuart Kaiser, an equity strategist at Goldman Sachs Group. “The idea that equities are cheap is not quite right when all factors are considered.”
Now, who the hell is Stuart Kaiser?
From what we understand, Kaiser actually works on Kostin’s team. So it’s not a surprise that they share bearish opinions.
But this doesn’t necessarily mean Goldman Sachs is bearish. Let’s review what we’ve heard from the firm’s various strategists.
Photo: Bloomberg TV
David Kostin, Chief Equity US Strategist: BEARISHBack in December, Kostin said he thought the S&P 500 would end 2012 at 1,250. This officially made him one of the most bearish strategists on all of Wall Street. And despite the monster rally in stocks since then, Kostin hasn’t budged.
“We based our investment thesis for US stocks at the start of 2012 on three assumptions: (1) stagnating US economy; (2) stagnating P/E multiple; and (3) modest earnings growth,” wrote Kostin in a recent client note.
Photo: Charlie Rose via YouTube
Jim O’Neill, Chairman of Goldman Sachs Asset Management: BULLISHWhen O’Neill published his 11 predictions for 2012, his position was that the S&P 500 was more likely to head to 1,400 than 1,000. His call came two weeks after Kostin’s 1,250 call.
O’Neill, the economist behind the BRIC acronym, continues to be bullish stocks. He recently pointed to the low volume in the markets as a reason why stocks could eventually go up.
“While many bears cite the lack of daily trading volume as a sign that the market lacks real conviction about these positive signs, it can also be argued that this reflects just how many investors have abandoned the equity culture and can still return,” he wrote in his popular Viewpoints note.
Photo: Bloomberg Television
Abby Joseph Cohen, President of the Goldman Sachs Global Markets Institute and Senior Investment Strategist: BULLISHIt’s hard to think of a time when Cohen wasn’t bullish. She made a name for herself in the late 1990’s by being bullish as the stock markets soared during the dotcom bubble.
Cohen recently appeared on Bloomberg where she reiterated a bullish tone.
“What really matters, though, is whether investors are saying to themselves now, we’re looking not just at this quarter but to the remainder of 2012 and into 2013. Investors seem to be much more comfortable about the intermediate term in the United States than they were even just a few weeks ago,” she said. “That is the sign of a continuing bull market. It doesn’t mean that the gains from here or the gains we’ve seen thus far should be extrapolated, but it does suggest that equities will continue to see some positive move.”
Peter Oppenheimer, Co-Head of Economics, Commodities and Strategy Research in Europe: BULLISHEveryone’s still buzzing about Oppenheimer’s note titled The Long Good Buy; the Case for Equities where he argued that the equity risk premium made stocks look incredibly cheap.
“The prospects for future returns in equities relative to bonds are as good as they have been in a generation,” he concluded.
Photo: Goldman Sachs
Goldman Sachs: BUEARLLISHSo far, we have three bullish strategists and one (or two) bearish strategists.
Let’s throw in another Goldman strategist: Dominic Wilson, co-head of Global Macro and Markets Research.
“We think that risk assets are likely to move higher as long as US data remain consistent with GDP growth of somewhat more than 2%,” wrote Wilson in a recent note.
That kind of sounds bullish.
But it’s actually kind of bearish if Wilson subscribes to Goldman’s Chief U.S. Economist Jan Hatzius, who hasn’t exactly been endorsing the idea that GDP will be greater than 2%.So, who are we supposed to listen to?
CNBC’s Andrew Ross Sorkin tried to get an answer when Jim O’Neill recently called into Squawk Box.
When asked about Oppenheimer’s note: “Well, it’s not from me. It’s from the brokerage side,” responded O’Neill. “So, I would take it up with them.”
When asked about Kostin’s 1,250 call: “You have to take that up with him,” said O’Neill.
Not helpful. But if you listen to the entire interview, it’s pretty obvious that O’Neill is more behind Oppenheimer’s bullish call.
However, we’re actually pretty sure that Kostin’s (and Kaiser’s) call is the official position of the firm.
Ultimately, if you’re a client of Goldman, you’re probably less than impressed that the firm doesn’t have a more clear and unified house view. The markets are very intimidating these days and uncertainty is already high enough.