US Sector Views 10 April 2025 | 5:30PM EDT Our sector model's updated recommendations are selectively defensive Ryan Hammond +1(212)902-5625 | ryan.hammond@gs.com Goldman Sachs & Co. LLC David J. Kostin +1(212)902-6781 | david.kostin@gs.com Goldman Sachs & Co. LLC Ben Snider +1(212)357-1744 | ben.snider@gs.com Goldman Sachs & Co. LLC Jenny Ma +1(212)357-5775 | jenny.ma@gs.com Goldman Sachs & Co. LLC Daniel Chavez +1(212)357-7657 | daniel.chavez@gs.com Goldman Sachs & Co. LLC Kartik Jayachandran +1(212)855-7 ...

Global Markets Comment: Too Early for the "All Clear" (Wilson/Chang) 10 April 2025 | 11:38AM EDT Too Early for the "All Clear" Yesterday's reversal on trade policy capped a dramatic week in markets. We have consistently argued that a reversal in the proposed tariffs was by far the most direct route to stabilizing markets. With signs of stress emerging in the US Treasury market emerging on Tuesday, that relief arguably prevented an acceleration in the market turmoil. Investors should consider this report as ...

Investment Rating - The report does not explicitly provide an investment rating for the industry but discusses expectations for the Treasury curve and market conditions, indicating a cautious outlook given rising recession risks and market volatility [3][6][24]. Core Insights - The report highlights a breakdown in the typical relationship between Treasury yields and risk assets during risk-off periods, with Treasuries exhibiting relative weakness despite broader risk-off sentiment [2][5]. - A significant factor contributing to the current market dynamics is the recalibration of fiscal risks, particularly in light of potential recession scenarios and legislative developments [10][23]. - The report emphasizes the fragility of the rates market, with deteriorating market depth and price impact measures, suggesting a need for close monitoring of funding conditions and Treasury auction performances [5][24][22]. Summary by Sections Market Dynamics - Recent volatility in the Treasury market is attributed to a mix of cyclical risks and shifts in the perceived supply/demand balance for Treasuries, exacerbated by positioning and thinner market liquidity [5][7]. - The current Treasury convenience yield has decreased sharply, indicating a relative cheapening of Treasuries compared to other forms of duration [10][14]. Economic Outlook - The report forecasts a steepening of the 2s10s Treasury curve towards 70 basis points by year-end, with historical precedents suggesting potential steepening above 100-150 basis points during prior recessions [3][6]. - The intersection of growth downside and inflation upside risks poses challenges for Treasuries' hedge value in portfolio settings, complicating the investment landscape [23][24]. Foreign Selling Concerns - While there are concerns about potential foreign selling of dollar assets, the report suggests that recent market movements do not clearly indicate this dynamic, with more focus on broader demand weakness [18][22]. - The report notes that shifts in the mix of reserve assets could pose medium-term risks for supply absorption, warranting attention to Treasury auction outcomes [22][24]. Portfolio Implications - The evolving role of Treasuries in investment portfolios is highlighted, with competing forces between growth and inflation impacting their value as a hedge [23][24]. - The report suggests that a sharp deterioration in market function could increase the likelihood of a Federal Reserve response to support market stability [24][26].

9 April 2025 | 12:14PM EDT US Daily: 5 Questions on the Near-Term Outlook for Trade and Fiscal Policy (Phillips) Jan Hatzius +1(212)902-0394 | jan.hatzius@gs.com Goldman Sachs & Co. LLC Alec Phillips +1(202)637-3746 | alec.phillips@gs.com Goldman Sachs & Co. LLC David Mericle +1(212)357-2619 | david.mericle@gs.com Goldman Sachs & Co. LLC Ronnie Walker +1(917)343-4543 | ronnie.walker@gs.com Goldman Sachs & Co. LLC Manuel Abecasis +1(212)902-8357 | manuel.abecasis@gs.com Goldman Sachs & Co. LLC Elsie Peng +1( ...

Investment Rating - The report indicates a downward revision of real GDP growth forecasts for China to 4.0% for 2025 and 3.5% for 2026, reflecting the impact of increased tariffs and a slowing global economy [1][10][11] Core Insights - The US has raised tariffs on Chinese imports to 125%, significantly affecting the Chinese economy and labor market, with expectations of further policy easing from the Chinese government [1][2][11] - The report anticipates a substantial reduction in Chinese real GDP, estimating a 2.6 percentage point decrease due to the increased US tariffs, with a projected impact of 2.2 percentage points in 2025 [4][9] - The Chinese government is expected to implement expanded monetary and fiscal easing measures, including a total of 60 basis points in policy rate cuts and an increase in the augmented fiscal deficit to 14.5% of GDP [10][18] Summary by Sections Tariff Impact - The effective US tariff rate on Chinese goods has escalated from 11% to 125%, which is expected to exert significant pressure on the Chinese economy [4][13] - The rapid escalation of tariffs has led to a reassessment of growth forecasts, with the report highlighting the challenges in achieving the previously projected 4.5% GDP growth for this year [3][11] Policy Easing Measures - The report outlines a series of forecast revisions, including an increase in policy easing assumptions and a rise in the augmented fiscal deficit estimate [10][18] - Expectations for faster credit growth and relaxed property policies are also noted as part of the government's strategy to mitigate the tariff impact [10][18] Growth Forecasts - The revised growth forecasts indicate a significant slowdown, with 2025 and 2026 real GDP growth now projected at 4.0% and 3.5%, respectively, down from previous estimates [10][21] - The report suggests that achieving the official target of "around 5%" real GDP growth for this year may be challenging, with alternative measures potentially falling below this level [11][21]

Investment Rating - The report reverts to a non-recession baseline forecast with GDP growth projected at 0.5% and a 45% probability of recession [4]. Core Insights - President Trump announced a 90-day pause on additional country-specific tariffs, maintaining prior tariffs and a minimum 10% reciprocal tariff, with expectations of further sector-specific tariffs [4]. - The total effective tariff rate is expected to increase by approximately 15 percentage points due to these tariffs [4]. - The previous shift to a recession baseline was reversed following the announcement, leading to a forecast of a peak core PCE inflation rate of 3.5% and three consecutive 25 basis point "insurance" cuts by the Fed in mid-2025 [4]. Summary by Sections - **Tariff Announcement**: President Trump authorized a 90-day pause on additional tariffs for countries that have not retaliated, while the tariff rate on imports from China will rise to 125% [4]. - **Tariff Impact**: The report anticipates a total effective tariff rate increase of about 15 percentage points, combining existing tariffs and new sector-specific tariffs at a 25% rate [4]. - **Economic Forecast**: The report projects a GDP growth of 0.5% for Q4 2025, a peak core PCE inflation rate of 3.5%, and a 45% probability of recession, along with expected Fed rate cuts [4].

Investment Rating - The report upgrades diversified retailers, dairy, and restaurants from neutral to a more favorable rating, while maintaining a cautious stance on apparel/footwear OEMs, furniture, projectors, discretionary small kitchen appliances, jewelry, and non-super-premium spirits [10]. Core Insights - Signs of bottoming out in the consumer sector were observed in 4Q24, with reported sales growth averaging 14% compared to 7% in 3Q24, aided by an easier base and better-than-expected post-Chinese New Year consumption [1][14]. - The outlook for 2025 is generally prudent, with expectations for gradual recovery supported by government initiatives to boost consumption, although growth is anticipated to be back-end loaded for most categories [2]. - Online retail sales have consistently outperformed total retail sales, indicating a shift in consumer purchasing behavior [20][21]. Summary by Sections Key Findings from 4Q Results - Retail sales growth improved to 4% year-on-year in January-February, up from 3.0% and 3.7% in November and December respectively, with online channels continuing to outperform [14][17]. - Margin trends were mixed; some companies reported better-than-expected margins due to favorable commodity prices and cost control, while others faced margin pressure from increased marketing and business expansion investments [15]. Expectations for 1H25 - Companies are generally optimistic about long-term growth, with some planning to increase investments despite a cautious short-term outlook [2]. - The impact of US tariffs remains a significant concern, particularly for companies with substantial exposure to the US market [2]. Sector and Stock Preferences - Preferred sectors include sports brands and diversified retailers, with specific stock recommendations such as Anta, Moutai, and Midea highlighted for their potential [11]. - The report emphasizes the importance of monitoring policy execution and tariff impacts on consumption and company performance [2][10].

Investment Rating - The report indicates that most equities have entered or are on the cusp of a bear market, with a focus on the potential for further downside [4][5][22]. Core Insights - The report identifies three types of bear markets: Structural, Cyclical, and Event-driven, with the current market being classified as Event-driven due to tariff triggers, but with a risk of transitioning into a Cyclical bear market [4][12][21]. - Average declines in both Event-driven and Cyclical bear markets are around 30%, but they differ in duration, with Event-driven downturns being shorter and recovering faster [22][12]. - The report emphasizes the importance of valuation adjustments, extreme positioning, policy support, and signs of improving growth for a sustained market recovery [40][45][58]. Summary by Sections Bear Market Types - Structural bear markets are triggered by imbalances and bubbles, Cyclical bear markets by rising interest rates and recessions, and Event-driven bear markets by one-off shocks [13][19]. - Historical data shows that Structural bear markets have the most severe impacts, averaging declines of around 60% and taking a decade to recover [15][19]. Current Market Analysis - The current market is characterized as an Event-driven bear market, primarily influenced by tariff increases, with a noted probability of recession rising to 45% [21][22]. - The report highlights that the US equity market has seen significant de-rating, particularly in technology stocks, which has impacted overall market performance [5][22]. Recovery Conditions - For a sustained recovery, the report outlines that valuations need to adjust further, and the market must see a combination of cheap valuations, extreme negative positioning, policy intervention, and signs of improving growth [40][45][58]. - The report notes that while the US market remains expensive relative to historical standards, other markets are not particularly inexpensive either [41][44]. Market Sentiment and Positioning - The report discusses the recent significant drop in market sentiment, indicating a broad-based 'risk-off' approach among investors, which historically signals better opportunities for buying [60][62]. - The Risk Appetite Indicator has shown a considerable decline, suggesting that market positioning is adjusting to a more negative outlook [60][62].

8 April 2025 | 2:22AM BST Global Markets Daily: Tariffs and the Dollar: Why We Flipped Our View Tariffs and the Dollar: Why We Flipped Our View We have made a major shift in our Dollar view after seeing the developments of the last few weeks and rethinking the likely implications of these policy changes. We now expect recent Dollar weakness to persist, particularly in DXY terms. This change reflects a number of related factors, but the common thread is that the exceptional positioning that has supported the ...

7 April 2025 | 11:00PM EDT Oil Comment: How Low Could Oil Prices Go? Yulia Zhestkova Grigsby +1(646)446-3905 | yulia.grigsby@gs.com Goldman Sachs & Co. LLC Daan Struyven +1(212)357-4172 | daan.struyven@gs.com Goldman Sachs & Co. LLC Callum Bruce, CFA +1(212)902-3053 | callum.bruce@gs.com Goldman Sachs & Co. LLC Ephraim Sutherland +1(972)368-0395 | ephraim.sutherland@gs.com Goldman Sachs & Co. LLC Investors should consider this report as only a single factor in making their investment decision. For Reg AC ce ...