Goldman to Clients: Get Out of Stocks

[Butifldrm]

Goldman to Clients: Get Out of Stocks Before Fiscal Cliff Hits

Published: Monday, 20 Aug 2012 | 11:58 AM ET Text Size By: John Melloy

You can sense almost an air of desperation from David Kostin, Goldman Sachs chief U.S. equity strategist, in his latest note to clients as he pleads with them to take money out of stocks before they fall off the fiscal cliff.

Steve McAlister | Photodisc | Getty Images

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In the note, Kostin vehemently defends his year-end S&P 500 [.SPX 1413.17 --- UNCH (0) ] target of 1250 despite the benchmark’s recent rise to above 1400. The strategist still sees a 12 percent drop ahead, believing that Congress will fail to address the fiscal cliff before the election, and maybe even before the end of the year.

“Political realities and last year’s precedent suggest the potential that Congress fails to reach agreement in addressing the fiscal cliff is greater than what most investors seem to believe based on our client conversations,” said Kostin.

The so-called fiscal cliff is the expiration of payroll, capital gains and dividend tax cuts at the end of this year. It also refers to the mandatory sequestration of spending that resulted from the vicious debt ceiling fight last summer.

“Last year, the deadline for Congress to raise the federal debt ceiling (explain this) was known months in advance,” states the report. “Nevertheless, Congress was unable to reach an agreement that satisfied all factions. Investors were stunned and the S&P 500 plunged 11 percent in 10 trading days.”

The worst case scenario this year is that a lame duck Congress does absolutely nothing after the election – not even kick the can down the road by voting in a short extension of the tax breaks and spending plans. Under that scenario, 2013 GDP would actually contract, according to Goldman Sachs economists.

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Current DateTime: 01:11:00 22 Aug 2012

What’s more likely is an extension of some of the more impactful tax cuts and spending plans (like those effecting defense). (Read More: "How Much Will It Cost You If Bush Tax Cuts End? A Lot"). But that is still a failure to address the issue full-on before the end of the year and that continued uncertainty will still hurt the economy and market significantly, according to Goldman.

“We believe the uncertainty is greater this year than it was 12 months ago,” wrote Kostin.

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http://www.cnbc.com/id/48725644

[LS1Hawk]

It was either on Alex Jones or the Hagmann and Hagmann report stating that China pulled out of the US stock market, George Soros pull a huge amount of his money from the market, and Hedge funds are closing all over the place.

Its going down, and I do mean down. That correction in the market is near.

COME ON DINAR!!!

[carlos in san diego]

It was either on Alex Jones or the Hagmann and Hagmann report stating that China pulled out of the US stock market, George Soros pull a huge amount of his money from the market, and Hedge funds are closing all over the place.

Its going down, and I do mean down. That correction in the market is near.

COME ON DINAR!!!

With all due respect LSIHawk...calling what's coming a "correction" is like calling what we have in this country a "recession" when in fact, we are in a worst "depression" since the GREAT DEPRESSION. And by the way. I've seen evidence that every downturn in the market was manipulated by the Banksters so that they could profit, even the Great Depression. The bankers manipulate the markets by spreading rumors of insolvent banks causing runs on the banks, when the banks can't meet the demand for cash that is being withdrawn, they are forced to close, and everyone looses but got themselves out along with their friends, so they would not loose along with the rest. Once the markets bottom out, the Elite Bankers buy up everything at bargain basement prices. The huge masses of unemployed force labor prices down, so that the corporate elite take advantage of the lower wages. They win all around and the people loose... Interesting thing to consider when thinking of this is...so where our our Government elected officials when all this market manipulation. Do you think they are wringing their hands in despair? Nope...you can find them at the Country Club sucking on a Gin and Tonic, with their banker buddies, all having a good time! wearing the finest clothes and driving the most expensive cars. While millions are homeless and unemployed.

Nice folks you guys elect to office! All you guys who cherish the idea that your in charge of your political party and our government...Your not! Carlos

[R2D2]

Guys my wife is a 22 year vetran of the market. Her thoughts are when the street is selling you need to be buying. When GS says get out I would consider getting in all the way, as much as you can afford to loose. In case you have not ben paying attenion. GS has been doing everything possibe to manuplate the market. They are what I call shadow theives.

Edited August 23, 2012 by R2D2

[Goodlife]

Sooner or later the Bull is going to fall through the floor and wont be getting up in a hurry.

[The Machine]

[DWitte]

With all due respect LSIHawk...calling what's coming a "correction" is like calling what we have in this country a "recession" when in fact, we are in a worst "depression" since the GREAT DEPRESSION. And by the way. I've seen evidence that every downturn in the market was manipulated by the Banksters so that they could profit, even the Great Depression. The bankers manipulate the markets by spreading rumors of insolvent banks causing runs on the banks, when the banks can't meet the demand for cash that is being withdrawn, they are forced to close, and everyone looses but got themselves out along with their friends, so they would not loose along with the rest. Once the markets bottom out, the Elite Bankers buy up everything at bargain basement prices. The huge masses of unemployed force labor prices down, so that the corporate elite take advantage of the lower wages. They win all around and the people loose... Interesting thing to consider when thinking of this is...so where our our Government elected officials when all this market manipulation. Do you think they are wringing their hands in despair? Nope...you can find them at the Country Club sucking on a Gin and Tonic, with their banker buddies, all having a good time! wearing the finest clothes and driving the most expensive cars. While millions are homeless and unemployed.

Nice folks you guys elect to office! All you guys who cherish the idea that your in charge of your political party and our government...Your not! Carlos

Excellent post Carlos.

DW