Goldman Sachs(US:GS) Jin Rong Jie·2025-05-08 02:26Core Viewpoint - Goldman Sachs' risk manager Josh Schiffrin shifted his stance from bearish to bullish, predicting a market rebound within 6-12 months despite current market pessimism [1] Group 1: Market Predictions - Schiffrin anticipates a strong market rebound driven by potential negotiations to lower trade barriers and tax cuts, despite risks of a global trade war or recession [1] - After a significant rebound, Schiffrin now expects the market to enter a consolidation phase, indicating a shift from bullish to neutral [3] - The current market prices reflect optimistic expectations regarding trade, which may have already been priced in [3] Group 2: Currency and Commodities Outlook - The dollar has entered a bear market, with expectations of further declines, potentially reaching a target of 1.25 against the euro [3] - Schiffrin maintains a bearish outlook on oil prices, predicting they could drop to $45 due to OPEC's production increases [4] Group 3: Investment Strategies - Recommendations include shorting overvalued sectors such as non-profitable tech stocks and high-yield stocks [5] - The market is currently influenced by three main themes: positive tariff news, underexposure of discretionary and systematic investors, and the reduction of left-tail risks [7] Group 4: Economic Indicators and Market Sentiment - Strong non-farm payroll data has temporarily alleviated recession fears, but concerns about economic slowdown and high earnings expectations remain prevalent [9] - The recent market movements reflect overly optimistic expectations regarding the economic cycle, suggesting a downward bias in risk-reward ratios [10] Group 5: Long-term Market Considerations - A potential decline in U.S. stock price-to-earnings ratios to 18 times could indicate a 20% drop from current levels, prompting diversification away from concentrated investments in large-cap stocks [11]