Stock market could jump on any good news, says Lloyd Blankfein

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  • This year’s stock market decline has turned sentiment around, making most investors too negative.
  • But former Goldman Sachs CEO Lloyd Blankfein reminded investors that any good news could send stocks higher.
  • “Positive elements may be lurking. Fed break, Ukraine truce, China lockdown ending, etc. Sentiment may change suddenly,” he tweeted.

Former Goldman Sachs CEO Lloyd Blankfein reminded investors that despite all the bad news this year, the stock market could still rise.

Investors faced a months-long bear market, where every significant rally eventually broke down and led to new lows. The S&P 500 fell 25% to a year-to-date low as investors continued to struggle with lingering inflation and an increasingly tight Federal Reserve.

The Fed is expected to raise interest rates another 75 basis points after its FOMC meeting on Wednesday. And unless inflation shows signs of easing by December, the Fed will likely raise rates by at least another 50 basis points, if not 75, at its year-end meeting.

But according to Blankfein, sentiment has turned too negative as market participants digest the steady stream of bad news.

“It seems like EVERYONE is negative about the [market] with sticky inflation, more rate hikes, more bad things to come,” he said. tweeted this weekend. He’s not wrong: the AAII’s weekly investor sentiment survey recorded historic bearish readings over the past month.

And when that happens, it’s usually a good time to switch to the other side of the trade. “Inconceivable for all experts to be right, but often all are wrong,” Blankfein tweeted.

His tweet was a retweet of a Wall Street Journal article that interviewed investment professionals to assess where they see the market going forward. Most viewpoints in the article believed that volatility and inflation would not go away and therefore the market would more likely than not trade lower rather than higher.

GMO’s Jeremy Grantham said the fundamentals were as bad as “we’ve ever seen”, adding that the US stock market was in the early stages of deflating a “super bubble”.

Blankfein couldn’t disagree more.

“Think things have never been so scary?” Really ? We lived through the Cuban Missile Crisis when we stopped Soviet ships in international waters. Are these really the most polarized moments? children blew up recruiting centers and the National Guard fired on campuses. We got through this, we will get through this,” he said.

“It’s never as bad as your worst fears or as good as your best hopes,” Blankfein added.

He said any good news could reverse the woes in stocks and lead to an upside.

“The bad news is so piled up that people underappreciate the fact that there are several plausible good news items that could positively affect the market…markets are not just the current economy, they are looking to the future,” he said. Blankfein told The Wall Street Journal.

So what good news could lift stocks? According to Blankfein, there are a lot of them: “Positive elements may be lurking. Fed break, truce in Ukraine, end of China lockdown, etc. Sentiment may change suddenly.”

Tweet by Lloyd Blankfein


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