The U. S. and China are exchanging barbs and throwing punches over trade, threatening to upset the global apple cart. Yet Goldman Sachs remained surprisingly sanguine, if not upbeat, amid heightened tensions between the two economic heavyweights.
The U. S. and China are locked in a trade-and-tariff tiff that threatens to rattle the global economy. Yet, analysts at Goldman Sachs remain surprisingly sanguine, if not upbeat.
David Kostin, chief U. S. equity strategist at the investment bank, late Wednesday maintained his S&P 500 target of 2,850 for the year-end even as he listed a number of issues, including escalating tensions with China, that had turned against the market since President Donald Trump was voted into office nearly two years ago.
The strategist expects the bull market, in its ninth year, to extend its run into 2019 on the back of robust earnings as sales and profits at U. S. companies are expected to rise and outperform market expectations. Earnings this year are forecast to rise 19% to $159 and then 7% to $170 next year.
But the strategist admits that valuation is stretched although not extreme with the S&P 500 trading at a 86th percentile versus the average over 40 years. The forward price-to-earnings ratio—a popular gauge to value stocks—hovers at 16 to 17 times.
