These statements suggest that traders should expect comparable conditions as those we encountered in August of 2011. The fiscal cliff - which would otherwise deduct 5% GDP growth - and the never-ending debt ceiling debate signal a coming marketplace crash.
Nevertheless, if policy-makers are able to formulate some sort of solution, Kostin believes we'll experience a major upside, with a six month target of 1450 and the S&P ending at a target of 1575, “calculated by applying a 13.9 multiple to the firm's EPS forecast of 114.”
Tyler Durden at Zero Hedge elaborates: Of course, this being bizarre Goldman Sachs it means expect a continued surge into year finish, then prolonged fizzle into the new year. Why? Because there is not a snowball's chance in hell the consolidated S&P earnings can grow at this rate, especially not if the Fiscal Cliff compromise is one that does take away more than 1% of GDP thus offsetting all the "benefit" from QE. Rare Coins, Silver Coins, Gold Coins, Learn more >> http://www.silverpricestoday.cc/
Simply said, companies who have already eliminated all the fat, and most of the muscle, and are desperate for revenue growth to generate incremental EPS increase, have not invested in CapEx at nearly the rate needed to maintain revenue growth (see How The Fed's Visible Hand Is Forcing Corporate Cash Mismanagement)
The general message Kostin asserted in his statement was that equities are a lucrative long-term option for traders despite the fact that there are some serious near-term risks looming as we come close to the edge of the fiscal cliff.
Stuart Eizenstat, former undersecretary of State and deputy secretary of the Treasury under President Bill Clinton, also sees a “very strong” recovery for the U.S in 2013... but why? According to Kostin, the FOMC's open-ended easing program allows traders to look forward confidently and focus on corporate fundamentals in lieu of the stagnant economy. He believes QE has successfully reduced investor risk when it comes to equities although it has yet to improve any GDP growth expectations.
Due to the lingering doubt and loose fiscal policies, Goldman's year-end 2012 price target rests at 1250. Although they anticipate an serious downside in the near-term, Goldman also expects a restoration in 2013, before racing even higher in 2014. My suggestion is to buy gold and buy silver now before the market crash wipes out your wealth! How high will silver go? Learn more >> http://silverpricestoday.cc/