Goldman Sachs Issues Short-Term, Tactical Downgrade of U.S. Stocks
Goldman Sachs issued a tactical downgrade on U.S. equities to Underweight over a 3 month period, but remains Neutral over 12 months. They remain overweight cash and would add to equities on a reset lower.
Strategists led by Christian Mueller-Glissmann note the rally in risky assets continued and broadened. They cite the S&P 500 is at all time highs, the VIX down sharply, bond and 'safe havens' have sold off and cyclicals have outperformed defensives.
They believe the light positioning into Brexit and the search for yield are the key drivers.
However, given expensive equities valuations and poor earnings growth they view equities at the upper end of their 'fat and flat' range.
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