- This yr’s stock market decline has flipped sentiment, turning most investors overly negative.
- But former Goldman Sachs CEO Lloyd Blankfein reminded investors that any excellent news could send shares higher.
- “Positives may be lurking. Fed pause, Ukraine truce, China lockdown end, etc. Sentiment can shift suddenly,” he tweeted.
Former Goldman Sachs CEO Lloyd Blankfein reminded investors that despite all the unhealthy information this yr, the stock market could nonetheless transfer higher.
Investors have had to cope with a months-long bear market, the place each significant rally in the end unraveled and led to new lows. The S&P 500 was down 25% at its year-to-date low as investors proceed to grapple with persistent inflation and an ever-tightening Federal Reserve.
The Fed is anticipated to elevate rates of interest by one other outsized 75 foundation factors at the conclusion of its FOMC assembly this Wednesday. And except inflation exhibits indicators of easing between now and December, the Fed will seemingly hike rates by at least another 50 basis points, if not 75, at its year-end assembly.
But in accordance to Blankfein, sentiment has shifted overly negative as market members digest the steady circulate of unhealthy information.
“Seems EVERYONE negative on the [market] with sticky inflation, more rate hikes, other bad stuff ahead,” he tweeted over the weekend. He’s not incorrect: the weekly AAII Investor Sentiment survey has registered historic bearish readings over the previous month.
And when that occurs, it is normally an excellent time to take the different aspect of the commerce. “Inconceivable for all pundits to be right, but often all are wrong,” Blankfein tweeted.
His tweet was a re-tweet of a Wall Street Journal article that interviewed funding professionals to gauge the place they see the market going ahead. Most viewpoints in the article had been of the considering that volatility and inflation are usually not going away, and due to this fact the market will extra seemingly than not commerce decrease as a substitute of higher.
GMO’s Jeremy Grantham said the fundamentals are as bad as “we have ever seen,” including that the US stock market is in the early phases of deflating a “super bubble.”
Blankfein could not disagree extra.
“You think things have never been scarier? Really? We lived through the Cuban missile crisis when we were stopping Soviet ships in international waters. These are really the most polarized times? I was around in 1968 when there were assassinations of public figures, when kids were blowing up draft centers, and the national guard was shooting on campuses. We got through that, we’ll get through this,” he stated.
“It’s never as bad as your worst fears or as good as your best hopes,” Blankfein added.
He stated that any excellent news could reverse the woes of shares and lead to a transfer higher.
“The bad news is so stacked up that people are under-appreciating the fact that there are several plausible pieces of good news that could affect the market positively… markets are not just the current economy, they look ahead,” Blankfein instructed the Wall Street Journal.
So, what excellent news could send shares higher? According to Blankfein, there are plenty: “Positives may be lurking. Fed pause, Ukraine truce, China lockdown end, etc. Sentiment can shift suddenly.”