Goldman Sachs strategist Tony Pasquariello says the US equity bull market primary trend remains higher but flags energy prices as a clear danger and warns risk-reward has deteriorated after a historic Nasdaq rally.
Goldman Sachs strategist Tony Pasquariello says the US equity bull market primary trend remains higher but flags energy prices as a clear danger and warns risk-reward has deteriorated after a historic Nasdaq rally. Summary: Goldman Sachs strategist Tony Pasquariello told clients on Monday that the primary trend in US equities remains higher, supported by five consecutive weeks of gains that reversed five prior down weeks, driven by resilient economic data, strong earnings and improved sentiment following a ceasefire announcement, per the client note First-quarter earnings growth more than doubled expectations, with 61% of S&P 500 companies beating estimates by more than one standard deviation and only 5% missing by that margin, the best such performance outside the 2021 reopening in 25 years, according to Pasquariello Goldman’s baseline forecast calls for 2.1% GDP growth and 12% earnings growth, with the S&P 500 seen rising from around 7,200 to 7,600, per the note Pasquariello cautioned that risk-reward has become less attractive following the Nasdaq 100’s 15.6% monthly gain, its largest in more than 23 years, and noted that systematic investors have largely completed their buying, according to the note The strategist flagged energy prices as a clear-and-present danger to the bullish outlook, and warned that inflation could constrain the Federal Reserve from delivering additional rate cuts, per the client note Pasquariello recommended a long delta, long vol positioning construct, advising investors to hold high-conviction names while using cheap options to build hedges, according to Goldman Sachs Goldman Sachs strategist Tony Pasquariello reaffirmed a bullish outlook for US equities on Monday while delivering a pointed warning that energy prices represent a clear and present danger to that view, as the firm held its S&P 500 target at 7,600 against a backdrop of deteriorating risk-reward following a historic technology rally.
In a note to clients, Pasquariello…