Goldman to Clients: Get Out of Stocks Before Fiscal Cliff Hits

Discussion in 'Economics' started by Free Thinker, Aug 20, 2012.

  1. You can sense almost an air of desperation from David Kostin, Goldman Sachs chief U.S. equity strategist, in his latest note to clients as he pleads with them to take money out of stocks before they fall off the fiscal cliff.
    In the note, Kostin vehemently defends his year-end S&P 500 [.SPX 1415.81 -2.35 (-0.17%) ] target of 1250 despite the benchmark’s recent rise to above 1400. The strategist still sees a 12 percent drop ahead, believing that Congress will fail to address the fiscal cliff before the election, and maybe even before the end of the year.

    “Political realities and last year’s precedent suggest the potential that Congress fails to reach agreement in addressing the fiscal cliff is greater than what most investors seem to believe based on our client conversations,” said Kostin.

    The so-called fiscal cliff is the expiration of payroll, capital gains and dividend tax cuts at the end of this year. It also refers to the mandatory sequestration of spending that resulted from the vicious debt ceiling fight last summer.
  2. Translation: We need a pull back to buy into.
  3. Noise.