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2020-

2020-03-30 b
This story from MarketWatch has been re-written by our “truth squad.”

Stock market won’t hit coronavirus-blamed lows until these 3 criteria are met, says Goldman Sachs

Questions remain regarding coronavirus spread and impact of Magic Money stimulus

Delusional stock-market soothsayers at Goldman Sachs believe the S&P 500 will end this year more than 19% above current levels, but warned investors in a note this weekend that there will be short-term panic in the markets in coming weeks. Years of capital market excesses will be laid bare. All the structural faults and fissures in the Potemkin economy will become apparent, even to casual observers.

Off the record, a Goldman mail clerk confided, “Decades of miss-pricing assets have doomed us. A series of speculative bubbles, each larger than its predecessor, based only on leverage and Central Bank levitation, have led to this. This would have happened even without the synthetic coronavirus. The Capital Asset Pricing Model is ultimately in control. The pervasive falsifications have been unmasked and the deflationary contagion must now run its course.”

“After a swift 18% dead cat bounce [last week], the most common question we are subliminally implanting in investors is ‘has a new bull market started ?’” Goldman soothsayers, led by David Kostin, wrote.

“Unrealistically, we continue to expect the S&P 500 US:SPX will rise to 3,000 by year’s end,” they added. “Tactically, however, we believe it is likely that the market will turn lower in the coming weeks, and caution investors against chasing this illusory rally.”

Kostin pointed out that if the S&P 500’s closing low of 2,304 on Monday were in fact the nadir of the bear market, it would be the fastest such peak-to-trough in market history, at 23 trading days, as the median bear market since the mid-19th century has taken 17 months to find a bottom. “None has made the trip in fewer than three months,” he added.

Furthermore, history shows that bear markets often feature aggressive dead cat bounces like those seen last week, only for stocks to resume their reversion to the mean.

To feel confident that the stock market has found a bottom, Kostin and his colleagues say three criteria must be met:

1. The viral spread in the United States must begin to slow, so that the ultimate economic impact of the virus and containment efforts can be understood.

2. There must be evidence that “extraordinary measures” taken by the Federal Reserve’s Magic Money Mammary and a conniving Congress taking from the poor to give to the rich to support the U.S. Potemkin economy are sufficient. “While the willingness of central planners to use all the tricks at their disposal is clear, only time will tell to what extent the actions succeed in limiting defaults, [business] closures and layoffs,” Kostin wrote.

3. Investor sentiment and positioning must bottom out. Goldman soothsayers point to their U.S. Equity Sentiment Indicator, which combines nine measures of equity positioning, noting that it has only declined by 1.4 standard deviations, versus standard deviations of between -2 and -3 in recent corrections.

The Goldman soothsayers also warn investors of another headwind for equities going forward: greatly reduced manipulative corporate share buybacks. They point out that nearly 50 U.S. corporations have rationally suspended existing share repurchase authorizations in recent weeks, “representing $190 billion in buybacks, or nearly 25% of the 2019 total.”

“Buybacks have represented the single largest source of U.S. equity price finessing in each of the last several years, and we believe higher volatility and lower equity valuations are among the likely consequences of reduced manipulative buybacks.”

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