Sunday, April 14, 2024

Global rally stalls, but Goldman Sachs doubles its value on value stocks

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Hello, Bull Sheeters. The global rally is on hiatus this morning as thunderstorm clouds – mostly in the form of COVID gloom and Brexit uncertainty – gather. It’s a risky morning.

This is after the three major US indices closed last week in record territory. Many thanks to Rey Mashayekhi for picking up the keys to guide you through this. You see, good things happen when Rey is in charge.

Let’s check out today’s action where I enter Goldman’s bullish call on value stocks for 2021.

Market update


  • The main Asia Index are generally lower in afternoon trade with Japan Nikkei down 0.8%.
  • China reported a big jump in november exports, his biggest monthly gain since pre-COVID days in early 2018. Less impressive was the growth in Chinese imports over the past month.
  • Metal movers. The price of copper, aluminum, iron ore, zinc and other commodities continue to rise, a classic bet for investors that the global economy will rebound strongly in 2021.


  • the European scholarships are generally lower outside the doors with the Stoxx Europe 600 down 0.5% two hours after the start of the trading session.
  • the pound sterling falls this morning like – stop me if you’ve heard this one – post-Brexit trade talks Keep tangling to the wire.
  • Iconic British retailer Debenhams, which is on the verge of liquidation, could be thrown a lifeline as acquisition talks resume. It was a brutal christmas time for the UK retail sector. Imagine what a no-deal Brexit would mean for Britain’s main street.


  • American Futures point towards a weak opening because the high sugar stimulation talks are getting wither. Last week, the top three indexes rose for the week.
  • His a huge week for IPOs as By Dash and Airbnb both seek to do their stock market debut. According to the Wall Street newspaper, DoorDash seeks to assess the actions of the $ 90 rangeand Airbnb nearby 60 dollars.
  • Count Goldman Sachs among the converts EV bulls. He considers that electric vehicle options represent almost 20% market at the end of the decade, and the incoming Biden administration like a big shake for greener vehicles. As such, Goldman sees a You’re here 12-month course target up to $ 780 per share.

Somewhere else

  • Gold is falling, trades below $ 1,840 / ounce.
  • the dollar is on the rise, but is approaching its lowest level in 6 years.
  • Gross is down, with Brent futures trading below $ 49 / barrel.
  • Bitcoin is flat, trades above $ 19,300.
  • And the price of the mighty white truffle, a Bull Sheet favorite, is at 2,650 € / kg, according to the faithful Acqualagna truffle bag. In an all-cash transaction, I paid € 60 for a few loose nuggets this weekend that we ended up shaving around a dish of risotto, a meal that later came back in my dreams.


Pay dividends

The S&P 500 closed on Friday at 3 699.12, a mustache below Goldman Sachs’ much-watched year-end forecast of 3700. Obviously, Goldman has underestimated all of your bulls.

The benchmark is up by one 4% over the past month, aided by vaccine breakthroughs and the promise to start fighting this COVID scourge. Meanwhile, value stocks surged 12%, and, adds Goldman, “Dividend futures represent an attractive opportunity that is lagging behind.”

This is because all kinds of businesses, from Marathon oil at Estée Lauder, have resumed paying dividends to investors. As the chart below shows, there were 67 dividend cuts and / or suspensions between March and August of this year, but only one since then and now. And, over the past three months, we’ve seen 72 dividend increases and / or initiations.

This is the good news. Here’s the not-so-good news.

Goldman writes that the market for dividend contracts for the coming year implies that dividends for S&P 500 companies will in fact be 5% drop in 2021 and 1% more in 2022. Further on, the situation does not improve much. “In fact, the dividend yield curve is inverted over the next decade, with each contract through 2029 trading below 2019 levels, implying average annual dividend growth of -1% from 2019 to 2029. “

Here’s what it looks like (as indicated by the gray “swap market” line).

This view is not only pessimistic, it runs counter to the bullish sentiment around soaring stock prices. Investors are pushing stocks higher even as earnings take a hit. And, of course, when the bottom line is underperforming, companies cut dividends, which the swap markets line tells us.

But Goldman sees a glass half full here. He predicts that dividends per share will continue to trend higher next year and beyond, throughout the decade.

Goldman expects earnings to rebound in 2021, which “will lead to dividend growth of 5% in 2021”.

There is something in Goldman’s logic. Value stocks are reliable dividend payers, and investors are flocking to these stocks.

The question is, how long will this “lagging opportunity,” as Goldman calls it, last?



Last spring my hornetsmade the headlineofNew York Times. Ok they weren’tmy hornets. But, yes, they really looked like them. Evil winged monsters. Visibly large mandibles. And those eyes! the Times called them murderous hornets, explaining that they had made the trip from Asia.

I sent the article to Walter, a source of trust on that stuff. He’s a German beekeeper. He always seems to have a solution on the next ecological intruder who throws our natural world out of action. Walter texted me back. Yes, we’ve had them here in Europe for over a decade, he replied.

In the summer of 2019, a bunch of stubborn hornets –hornetas the Italians call them; killerhornets, I probably mumbled long before theTimesthe writers won on the internet – came down to our little hill in Amandola and set up a nest high in the elm, a few yards from the house. My kids and my wife harassed me to do something, whatever. My neighbors suggested that I smoke them. Channeling my inner Solomon, I decided to ignore them – every one of them: my neighbors, my family and the hornets.

And you know what? We survived. The murderous hornets didn’t kill us. (But that didn’t stop my neighbor from lighting a fire at the base of the elm a few days after we returned to Rome. The burnt trunk greets us as we enter the alley now.)

Fast forward to this summer. And, this being 2020, the killer hornets we are back. But in greater numbers, and now they were flying into the house, up the chimney. Obviously, I couldn’t ignore them anymore. (I later learned from a reliable source that the 2020 variety was made with native European hornets, not Asian killers; this information did little to appease my wife and children.)

Okay, but there’s no way I’m burning the trees to get rid of them, I told everyone, just to set some ground rules. I bought traps instead. I filled them with beer and honey and hung them from tree branches. It worked for a while – until my neighbor, Simona, got stung in September when she walked around the house to check.

Bernhard, she growled, you have to do something about these calabroni.

So with some free time last, I headed back to Amandola to plot our defenses for 2021. Technically, the lockdown rules prohibit travel between regions, that is, unless it is. is an emergency. My wife, children and Simona replied: this is an emergency situation!

The snow has already fallen up there so the hornets are long gone for the season. I lit a big fire in the fireplace and all kinds of little winged corpses fell into the fire in the fireplace above. I opened a bottle of wine and admired the fire. I grabbed my book, and was just starting to read… when the doorbell rang.


She wanted to know if I had figured out how to make our little plot of Amandola a no-fly zone for hornets. My wife texted me, wondering the same thing.

They want me to climb up a ladder and attach a screen to the top of the fireplace so the hornets can’t enter the house. Pino, my old gardener, thinks that’s a bad idea – that she’ll be sweating in no time, suffocating the vertebrates downstairs who just want to sit by the fire and read a book.

I have a few months to determine my next step.


Have a very good day everyone. I’ll see you here tomorrow.

Bernhard Warner

As always, you can write tobullsheet@fortune.comor reply to this email with suggestions and comments.


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