thedailybell.com / By Staff Report / THURSDAY, MAY 23, 2013
Goldman: Four Reasons Why the Market is Going Much Higher … Last night’s much-buzzed about research report from Goldman Sachs, in which the firm lays out its new S&P targets, contains an interesting rationale for higher stock prices. Rather than making the bull case based on earnings growth, Goldman believes that the 2% dividend yield on the S&P 500 will serve as a rising floor of sorts. This, along with an expanding PE multiple, augur well for US equities. – The Reformed Broker
Dominant Social Theme: Stocks are on a tear, despite the recent Nikkei setback.
Free-Market Analysis: Goldman Sachs has released a research report with four reasons why stocks are poised to go higher, as related in this short article posted over at The Reformed Broker.
The reasons reduce to some simple observations. First, the economy is getting better, meaning that good economic news will buoy stocks; second, stocks will continue to outperform bonds, which means stocks will attract a good flow of investment cash; third, companies will raise dividends, making stocks more attractive for those interested in an income stream; fourth, interest rates may remain low, benefiting stocks.
From our point of view, of course, it is simpler than that. Central bankers have decided that even the current rates of monetary debasement are not enough. They are determined to print even more money, thus swelling the prospects of equity even further.
In retrospect, the Japanese decisions to print money seems part of a larger promotion to make clear to a worldwide audience that economies are only being run one way these days, via Keynesian stimulation.
The BRICS, the EU and, of course, the US are all embarked on various forms of monetary stimulation and much of the talk in the financial press is about doing more of it rather than less.