The equity team at Goldman Sachs remains very bullish on the economy and the stock market despite the recent resurgence of the credit crisis. Though they failed to meet their mid-year target of 1300 by over 20% they are still very bullish about the next 3 month period and the remainder of the year:
“We maintain our 3-month price target of 1160 (+5%) and expect the S&P 500 will rise to 1250 (+13%) at year-end 2010.”
In terms of asset allocation they continue to like the recovery plays with cyclicals and high alpha sectors being overweights:
Our sector baskets suggest US equities have been tracking growth rather than regional trends since April 30. The Defensives vs. Cyclicals gap has been much larger than the Domestic vs. Global split.