Goldman Sachs’ Post

Chart from Bank of America Global Equity Risk-Love Sentiment Indicator on ISABELNET which is now at a level associated with euphoria which is a contrarian bearish indicator for stocks. #investorsentiment #sentimentindicators

Who is correct and who is mistaken? Leading up to 2024, there are contrasting perspectives on Equities and Commodities. The S&P500 boasts an impressive 23% year-to-date performance, while simultaneously, the Global Commodities Complex is experiencing a downturn of -13%. If the risk of a recession is on the rise, the risk-reward profile in equities may not be the most opportune starting point for the year. In my view, commodities could present an opportunity. #markets #finance #equities #commodities #recession source : Bloomberg

Last week at $1850 we closed our contrarian Negative outlook on Gold which we had held since April (at $2021). See the chart below depicting the three times we have captured the Gold movement over the last few years. The rationale for turning Negative Gold in April, quite a contrarian view at the time, was our expectation that the banking crisis had been averted, inflationary pressures would continue to decline and the Fed would not ease rates by 75bps as markets were predicting! Following recent developments we adjusted our expectations, concerned of near term inflationary pressures with energy prices once again providing a positive contribution to prices, yields approaching the upper end of their range given the Fed’s need to ensure its credibility, and last but not least our recent elevated concerns on Geopolitics presented during our Quarterly Outlook (prior to the latest developments in the Middle East) being the trigger. Always happy to discuss #Geopolitics #Economics #Markets #FX

Market Snapshot Oil, gold and bonds gain on Middle East conflict while stocks slide U.S. futures point lower amid Israel, Hamas conflict. Citi to sell China wealth management portfolio to HSBC. Italy battles for flexible EU budget rules as bond spreads widen. Things to watch in markets this week: Inflation data Fed minutes Third quarter earnings kick-off Oil prices IMF and World Bank meetings Visit our website to read more blogs on our daily market recaps: https://lnkd.in/gZquF_mt #marketnews #copytrading #StockTradingContest #WeCopyTrade #WeMasterTrade

Markets Can Talk, Is #Gold Listening? Volatility, Yield Reversion Early 20th-century market speculator Jesse Livermore supposedly quipped that the "market does what it should do, but not always when." I believe that might describe what to expect with very low #stockmarket volatility, high US rates and much lower government-#bond yields in the top economies. Gold beating the AI-driven S&P 500 in 2024 may show the benefits of the out-of-favor store of value. The full report is on the Bloomberg terminal here: https://lnkd.in/eXdYaHVU {BI COMD} Bloomberg Intelligence #commodities #macroeconomic

Alpha Bank Global Marketa Analysis - Global Markets Minesweeper (Week 25/03 - 29/03) “The Fed signals three rate cuts in this year. The S&P 500 increased at historic high. As the one-year total returns of the main equity indexes are elevated, mild profit-taking may happen, which can be followed by “buying into the dips”.” https://lnkd.in/dbJbUfis

Markets have reacted meaningfully lately to the prospect of lower short term interest rates, especially in the US. Dovish comments from key policy makers on the FOMC, alongside declining inflationary pressures and softer economic data has prompted markets to price in the prospect of interest rate cuts in the first quarter of next year. We believe bonds are in a sweet spot right now against this evolving backdrop, however there are also other investment opportunities which should stand to benefit if monetary policy is eased as 2024 ensues. One of those investment ideas is gold currently. The chart below illustrates gold’s performance during past easing cycles which has also tended to correlate with recessionary periods (the grey bars). We believe gold therefore provides an implicit hedge against a deteriorating economic landscape and the potential easing in monetary policy.

Volatility is popping across markets, from equities to commodities, currencies to treasuries, as investors pile into options markets for protection. Read our first weekly options column here:

The end of excess liquidity in the US could be red flag for Asia dollar bonds based on historical precedents. The current Fed fund expectations may be anticipating the need to loosen monetary policy on financial stability risk. This situation is one of the conflicting issues facing the Fed in 2024 and could create volatility across markets especially if macroeconomic conditions do not justify monetary largesse. https://lnkd.in/gu4Hqftc Note: Research is accessible only via the Bloomberg Terminal) To access Bloomberg Intelligence Strategy, you can type Bi STRAT <GO> in the Bloomberg Terminal. To access Bloomberg Intelligence Asia Credit Strategy Research and Data, you can type BI STRTA <GO> Fed O/N Reverse Repo vs US,Asia IG Spread

Lot’s have been said about the strong correlation between bonds and equities since COVID hit, therefore negatively affecting the diversification benefits (yet imperfect) of bonds in a traditional 60//40 portfolio. With geopolitical turmoils on the rise and the highly probable upcoming recession, we expect that this correlation will reverse back down. However, US bonds will only represent a *partial* hedge against volatility in equities. Exposure to long//short strategies, and adding commodities and currencies to a portfolio, have never been more relevant for diversification purposes, at least since the birth of the current regime of floating currencies in the 1970s.