Tuesday, August 18, 2015

Goldman is surprised. Probably at how idiotic their clients are.

BI - our clients' surprising question. Wow, this is just plain sad:

"One surprising question that clients have asked recently is the prospect for a US recession in 2016," Goldman Sachs' David Kostin wrote in a new research note. "An economic contraction is decidedly NOT in our forecast."

That's probably why the market has been weak. Everyone expects another 2008. That's why a 200% advance in the S&P 500 is still met by the blogosphere with childish Peter Schiff/Albert Edwards bullshit about global deflation and high yield collapse and that sort of crap.

This isn't the first time we've heard that recoveries don't die of old age. Perhaps the most popular leading indicator of recessions is the inverted yield curve, which is when long-term interest rates are lower than short-term interest rates. But as you can see below in the chart taking the difference between the 10-year yield (long-term) and the two-year yield (short-term), rates have a long way to go before the yield curve inverts.

Go there for the chart, I won't bother reprinting it here.

Suffice to say this is why I'm still long US and waiting patiently. Eventually people will stop being stupid.

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