- Goldman analysts recommend stocks over bonds as the economy is favorable for risk-taking.
- The US economy is thriving, supported by Federal Reserve easing.
- Rate cuts generally help risk assets, as long as a recession is avoided.
Goldman Sachs analysts noted that after a period of caution, market sentiment is shifting back to risk-on, favoring stocks over bonds. The US economy is currently in a late-cycle phase, which usually supports higher-risk investments since the economy remains strong with easing inflation.
They observed that although they had previously taken a neutral stance on stocks due to concerns about a market correction, stocks quickly rebounded following supportive Fed actions and stronger-than-expected economic data.
Currently, the analysts are again favoring equities, stating the global stock market faces lower risks, while bonds may have downside potential. They believe the conditions are ripe for stocks to perform well, driven by earnings growth.
However, they caution that uncertainties like geopolitical tensions and economic fluctuations could still lead to volatility, but could also create opportunities for risky assets. Overall, they suggest maintaining long positions with some protective strategies.
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