Shares rose again on Wednesday, with the Dow and S&P 500 indexes ending at their second-highest levels in history as investors continue to smile at strong economic growth prospects.
Goldman Sachs strategists are optimistic about the US economy, and expect that growth in annualized annual gross domestic product will sequentially occur at 10.5% in the second quarter of 2021. This would be the strongest quarterly growth rate since of 1978 (outside the increase in the middle of the end of 2020, when the economy rebounded from a sudden halt).
But it may not be good for actions. Our call of the day comes from the Goldman Sachs team, led by Ben Snider, which warns that as economic growth peaks, investors should expect lower equity returns and higher volatility.
Investment bank economists see U.S. GDP growth modestly slow in the third quarter of this year before continuing to decline over the coming quarters.
Chart through Goldman Sachs
“The slowdown in growth is usually associated with weaker but still positive stock returns, and higher volatility,” strategists say. Since 1980, the S&P 500 SPX,
has recorded average monthly returns of 1.2% when economic growth was positive and accelerating, but only 0.6% when growth was positive but slowing down.
In fact, stocks perform less well than at the time of growth. Investors who bought the S&P 500 when the Institute for Supply Management’s manufacturing index was above 60 (strategists point out) recorded average returns of -1% the following month and 3% next year. In March, the ISM manufacturing index reached 65 years.
But not all are bad news. Outside the United States, the world economy is still in tears. Goldman Sachs economists expect economic growth in Europe, Japan and emerging markets outside China to peak later than in the U.S. in the third quarter of this year. “As a result, some cyclical parts of the U.S. equity market are expected to do better in the coming months than they usually have when U.S. growth begins to slow,” strategists say.
Goldman Sachs GS,
has two tips: Buy cyclicals facing the world compared to cyclicals facing the country and buy a basket of stocks of “reopening of Europe”, which have been left behind the actions of “reopening the United States”.
The buzz
Called in cash to Credit Suisse: the bank will raise 1.7 billion Swiss francs ($ 1.9 billion) in additional capital following the fall of the Archegos Capital hedge fund. Credit Suisse CS,
he said he would lose another $ 654 million from the sale of fires that saw the settlement of positions approach $ 30 billion in March, following an initial hit of $ 4.7 billion.
On the economic front, initial unemployment claims are expected to show that 603,000 Americans applied for unemployment last week, up from 576,000 the previous week. This figure is due to be released at 8:30 a.m. Eastern Time, along with the continuation of unemployment claims during the week of April 10, before existing home sales in March come out at 10 in the morning, along with the main economic indicators.
Europe is moving towards the world’s first major laws on artificial intelligence. The European Commission, the executive branch of the European Union, on Wednesday proposed limiting police use of facial recognition and banning certain types of artificial intelligence systems.
On Wednesday, representatives of technology giant Apple AAPL,
and Google Alphabet GOOGL,
was grilled by the Senate Judiciary Subcommittee on Competition Policy, Antitrust and Consumer Rights over the broad powers of the App Store and Google Play Store.
In India, COVID-19 returns with revenge. The second most populous country in the world on Thursday reported a record of more than 314,000 new infections as the country’s health system capsized.
The markets
Future US stock markets YM00,
ES00,
NQ00,
they glide across the plain after Wall Street won again on Wednesday.
European Equity UKX,
DAX,
PX1,
rose on Thursday amid a wave of strong earnings reports, but it was Tokyo that advanced the path between Asian HSI stocks,
SHCOMP,
after the Nikkei 225 NIK,
increased 2.4% after two days of losses.
The graph
Chart using Bank of America
Our chart of the day shows the increase in sustainability reports among S&P 500 companies. In honor of Earth Day, read more about what this means and look at six other graphs showing the greening of the S&P 500.
The tweet
Via Twitter
After the Financial Times first reported on Wednesday that Uber is eating UBER,
would expand to Germany, participation of rival Just Eat Takeaway TKWY,
JET,
(JET) fell more than 4%. This sparked a bizarre exchange between the top executives of the two companies, initiated by JET leader Dutch billionaire Jitse Groen.
Random readings
How small beach huts became the hottest commodity in British real estate.
Bring It On: A $ 13,000 flute that disappeared nearly a decade ago in a taxi has been returned to its owner after police recovered it from a Boston music store.
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