Goldman research Europe

Discussion in 'Wall St. News' started by ASusilovic, Jan 21, 2010.

  1. In this week’s Strategy Matters we update our risk premia estimates for credit and equity in Europe. With an improved outlook for corporate default rates due to the improvements in economic conditions both asset classes are offering attractive valuations. The key points are:

    European credit and equity are both attractive

    We remain constructive on both European credit and equity, expecting a total return of 6.6% in EUR IG credit, 10.3% in EUR HY credit and 22% in equities this year. This positive outlook is supported by our analysis of the credit and equity risk premia, which both remain elevated relative to history, reflecting attractive valuations that can support returns.

    The investment horizon is key for comparisons

    The risk premia have been strong predictors of returns on a five-year basis and the risk premium for equities is higher than for credit on both an absolute and a relative basis. On a one-year horizon we focus on our return forecasts. On even shorter horizons comparisons are hard as returns on credit are likely to be more frontloaded than the return on equities, due to our expectations of fund flows into credit.

    The search for yield should benefit stocks with high dividends

    As the search for yield intensifies we believe that stocks with high dividend yields will benefit. Our GSSTCYDY basket offers 30 companies with the largest spread between their dividend yield and their corporate bond yield. Our GSSTHIDY basket consists of high yielding companies with the potential to grow dividends. We believe this basket has the potential to outperform the Stoxx 600 with lower risk.

    Dip buying opportunity...
  2. ...or Goldman pumping, trying to avoid a fire sale.
  3. ? should buy the stuff that GS has already bought. :cool:
  4. They market the expected 20 % surge for 2010 already for the last 4_5 month in every "Startegy Matters" paper...
  5. 1) ?......Did I "interpret" that correctly?
    2) Abby is making her voice heard. :cool:
  6. Oh boy,

    I wrote GS an email asking them to refrain from publishing Abby's "strategic insights" anymore. She had her famous 15 minutes in history. Time for her to retire...