Goldman Sachs Releases Recession Manual to Prepare Clients for Downturn

Contact Your Elected Officials
The Epoch Times Header

Goldman Sachs economists believe the chances of the economy entering a recession in the next two years are still low, even as the investment bank’s equity team has just released a recession manual for its clients on how to prepare for a downturn.

“A recession is not inevitable, but clients constantly ask what to expect from equities in the event of a recession,” chief U.S. equity strategist David Kostin wrote in a note to clients on May 19. “Our economists estimate a 35% probability that the U.S. economy will enter a recession during the next two years and believe the yield curve is pricing a similar likelihood of a contraction.”

Kostin pointed out that the latest rotations in the U.S. equity market suggest that traders are pricing growing odds of a recession that doesn’t mirror “the strength of recent economic data.” The research note cited that the dividend futures market suggests that S&P 500 dividends will drop by close to 5 percent in 2023.

“During the last 60 years, S&P 500 dividends have not declined outside of a recession,” Kostin stated.

According to Seeking Alpha, Goldman Sachs listed four key trends in the S&P 500 from past recessions to help navigate the financial market.

Index

Across the 12 recessions the United States has weathered since World War II, the index has declined from peak to trough by a median of 24 percent, according to Goldman Sachs.

A decline of this magnitude would send the S&P 500 to approximately 3,650, the bank’s strategists wrote.

Since its peak in January 2022, the S&P 500 index has declined more than 19 percent, to nearly 3,870, and is on the verge of entering a bear market. The average decline of 30 percent would send the index to 3,360, according to Goldman Sachs, which is a decline of 14 percent from the current level.

Earnings

Since 1948, the median decline in S&P 500 earnings from peak to trough during recessions has been 13 percent. Four quarters after bottoming out, earnings per share have recovered by a median of 17 percent, according to Goldman Sachs.

Looking ahead, analysts still don’t see a decline in earnings for S&P 500 companies. According to FactSet, analysts expect a profit increase of 10.1 percent for the calendar year 2022.

By Andrew Moran

Read Full Article on TheEpochTimes.com

The Epoch Times
The Epoch Timeshttps://www.theepochtimes.com/
Tired of biased news? The Epoch Times is truthful, factual news that other media outlets don't report. No spin. No agenda. Just honest journalism like it used to be.

Doxed Democrats Are Getting Fired Left and Left

Not a misprint because a title of “left and...

Hold Up, Feds, Without Federalism, There Is No USA

Federalism is essential to governing the U.S., yet the federal government is undermining it by bribing states to implement unnecessary federal programs.

A Widow Inspires The World

Erika Kirk moved the nation with her speech two days after her husband’s assassination, vowing to continue his mission and grow Turning Point USA.

Both Left and Right Are Making Lists

The right admired Charlie Kirk for his faith and patriotism, while the left opposed him for dismantling their positions and narratives with ease.

Redemption’s playbook: The Senior

The Senior isn’t your usual underdog tale, it’s real, it’s raw, and it flips every cliché on its head with a playbook full of grit and plenty of aftermaths.

News Anchor Resigns After Being Suspended Over On-Air Charlie Kirk Tribute

A WICS-ABC20 Springfield anchor resigns after being suspended for paying on-air tribute to the late Charlie Kirk.

FBI Investigating ‘A Lot More’ Than 20 People in Chats With Suspect in Charlie Kirk Assassination, Patel Says

FBI Director Kash Patel said the Charlie Kirk assassination probe has widened, with over 20 people linked to the suspect now under investigation.

California Housing Bill Squeaks Through Legislature in Tight Vote

California lawmakers approved a plan to allow more apartments near transit stops, bypassing local rules to fight high housing costs and shortages.

Trump Praises Bondi, Patel Over Response to Assassination of Charlie Kirk

President Trump lauded AG Pam Bondi and FBI Director Kash Patel for their handling of the investigation into the assassination of Charlie Kirk.

Trump Signs Memo Targeting Direct-to-Consumer Pharmaceutical Advertising

President Trump signed a memo to ensure drug ads give fair, balanced, and complete information to protect and inform American consumers.

Trump Runs out of Patience With China, Sharpens His Words

President Donald Trump’s recent remarks targeting China and its allies mark a noticeable shift in tone.

Trump Signs Order Renaming Department of Defense as Department of War

President Donald Trump on Sept. 5 signed an executive order renaming the Department of Defense as the Department of War.

Trump Signs Executive Order Targeting Countries That Unlawfully Detain Americans

President Trump signed an EO on targeting the unlawful detention of American citizens around the world and to facilitate the release of hostages.
spot_img

Related Articles

Popular Categories

MAGA Business Central