Goldman Sachs Report: US Stock Market Outlook and Trends

Goldman Sachs shifts to bearish view on US market, citing potential summer volatility and overvalued tech stocks, recommending tactical portfolio adjustments.

### Goldman Sachs Report: Shift from Bullish to Bearish Market Outlook
* 📉 Goldman Sachs recently issued a memo to clients, indicating a shift from a **bullish to a bearish market trend** for the US market this summer.
* 💼 The report suggests a "**tactical weakness**" in the market, recommending a **step back for every two steps forward** in the near future.
* 📈 The current market is considered **overbought**, with significant inflows of **$23.1 billion** into stocks, ETFs, and mutual funds in the first half of 2024.
* 📊 Market expectations for the top 10 S&P 500 stocks are high, potentially requiring **exceptional performance** to maintain current valuations.
* 🏦 Citigroup's Scott Kronmack also predicts a potential summer correction, advising to **reduce exposure to overvalued sectors** and **move funds to beneficiaries of potential rate cuts**.
* 🌐 The tech sector is particularly vulnerable, with market expectations for growth **exceeding what individual companies may be able to deliver**.
* 📉 Short-term market adjustments are expected, but there is no consensus on a **significant bubble** in the US stock market.
* 🔮 While the future is uncertain, it is recommended to **prepare for potential market volatility** and consider **shifting investments towards sectors that may benefit from changing market conditions**.

In this video, we will discuss recent reports from Goldman Sachs and similar topics. First, for those who are curious about the recent testimony of Jerome Powell at the Senate, I have already prepared a breaking news video, so please refer to that for details. In summary, Powell currently sees no signs of a downturn in the economy. The labor market is returning to pre-pandemic levels, and if it weakens further, the need for interest rate hikes may increase. However, the current unemployment rate of 4.1% is not considered high. This is the general view. According to a recent report from Goldman Sachs, they suggest a shift from a bullish to a bearish view on the US market this summer. They sent a memo to clients on Monday, indicating a change from a bullish to a bearish market trend for the near future.

An email will be sent, especially as I am currently monitoring the adjustment. When using this expression, especially late adjustments may come. Why might adjustments come? First of all, many people have bought it. The buying price is saturated. Therefore, additional ammunition is running out, and in the future, as the stock market enters the earnings season and election season, volatility may increase. Historically, the market tends to decline a bit after mid-July. So, this person observed that in the first half of 24, the amount invested in stocks, ETFs, and mutual funds was the second largest on record, reaching $23.1 billion. Also, $4.365 billion went into passive funds, which has been a significant factor in boosting the stock market. However, it seems that it will slow down in August. Historically, August is not a good month for investments.

The level of market expectations for the top 10 stocks that led the performance of the SMP 500 has become too high. In order to justify the steep increase in stock prices over a short period, even higher performance is needed to meet the heightened market expectations. Now, being satisfied with just average earnings surprises might not be enough. However, as the bar has been set too high, short-term issues could arise. This is Rub's view. On the other hand, what Goldman Sachs is saying is using this expression: tactical weakness. This means that the medium to long-term upward trend of the U.S. stock market and the strength of U.S. stocks remain unchanged. It is justifiable to consider a tactical retreat of one step back for every two steps forward tactically in the summer. This is the kind of discussion. Even if you look at the actual report, if you look at the Goldman report now, expectations for the SMP 500 performance, excluding finance and energy, are quite high.

You can see that the consensus is very positive for the future and continues to rise. The graph shows how much the consensus has changed compared to actual results and performance so far. Except for the early part of 2023, the actual performance has always exceeded the consensus. But now, with the consensus like this, if this trend continues, it will probably come out even higher. It can be seen that there are no major issues in the long term. This can also be considered a hidden conclusion. A similar opinion is also presented by JP Morgan's Andrew Tyler. However, how does JP Morgan's trading desk view the outlook? They need to prepare for this week's stock market volatility. One reason is because of the CPI, and they have made some predictions on how the stock market will move according to CPI fluctuations.

If I may introduce, when the highest probability values are limited to an increase from 0.15 to 0.25, the S&P 500 can rise by 0.25% to 1%. We are still pushing for a rate hike in September with a tactically optimistic attitude, but our certainty has weakened slightly. Showing a slight tailing off like this indicates that Scott Kronmack of Citigroup also believes there is sufficient potential for further market gains until the end of the year, but we should be prepared for a temporary decline over the summer. Concerns lie in tech companies leading the market rise, as the market reflects growth expectations that individual companies find difficult to meet. Optimism and unilateral emotions towards major tech stocks have completely dominated the market. At some point this summer, there may be a slight setback.

Saying you're getting ready means what kind of subjective action guidelines are you talking about. We also acknowledge the weight of the tech-focused market and naturally recognize the market wind generated by the generative AI market. However, if there is a situation where new funds need to be executed, then adjusting the portfolio should be the stance. In that case, rather than buying more tech stocks, it would be better to buy stocks that will attract attention after the Fed's interest rate decision. Therefore, we recently bought financial stocks and also put weight on the consumer sector. The communication sector also looks constructive as a sector. It seems wise to prepare for a correction as well. This is the stance we will take. Ultimately, it is desirable to reduce the weight in overvalued areas and move funds to beneficiary stocks that can benefit from the Fed's interest rate cuts. Let's also prepare for a correction in the stock market and make such forecasts.

While there is no guarantee that these stories will be accurate, in the end, let's summarize. Temporary adjustments may come in the summer, but no one is fundamentally saying there is a huge bubble in the U.S. stock market. It's just that there could be temporary downturns. The tech sector's bullish outlook is too prevalent. To explain the current high stock prices, the earnings need to be incredibly good. The market has already factored in optimistic future earnings, so there is a risk. Even if the earnings turn out quite well, if they don't meet the heightened market expectations, causing the stock prices to fall on the day of the earnings surprise, this kind of high volatility could occur. Therefore, if you are considering new investments, you might want to consider shifting towards sectors like technology, finance, or consumer goods that appear to have high volatility now. This is Citibank's perspective.

I think we can do it. The truth of this story will soon be confirmed. That's all for the video prepared for today. Please don't forget to subscribe and like. Thank you.

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Goldman Sachs Report: Shift from Bullish to Bearish View

Jerome Powell sees no immediate economic downturn, but a potential need for interest rate hikes if the labor market weakens.

Goldman Sachs has recently advised clients of a shift from a bullish to a bearish market trend for the US, citing saturated buying prices and potential volatility in the coming months.

The report also highlights a historically slow period for investments in August.

High Market Expectations for Top SMP 500 Stocks

The top 10 stocks in the SMP 500 are facing excessively high market expectations, requiring even greater performance to justify their increased stock prices.

Goldman Sachs suggests a tactical retreat in the summer, while still believing in the long-term upward trend of the U.

The consensus for the future performance of the SMP 500 is very positive, with actual performance consistently exceeding expectations, indicating no major long-term issues.

Potential Market Trends and Strategies for Investors

25% to 1% with a possibility of a temporary decline over the summer, leading to a focus on adjusting investment portfolios.

Scott Kronmack of Citigroup believes in the potential for further market gains but warns of a setback, especially in the tech sector.

In response, the strategy is to reduce weight in overvalued areas, invest in financial and consumer stocks, and prepare for a market correction in preparation for the Fed's interest rate cuts.

stock market is not seen as being in a huge bubble, but there are concerns about temporary downturns.

The high stock prices are heavily influenced by the tech sector's optimistic outlook and the need for incredibly good earnings to support them.

There is a risk of high volatility if the actual earnings do not meet the market's heightened expectations, potentially affecting stock prices.