GSAM’s Assessment of U.S. Economic Outlook and Stock Market

Goldman Sachs Asset Management (GSAM) maintains an outlook for the Federal Reserve to orchestrate a soft landing for the U.S. economy, with hopes of evading a recession. James Ashley, head of international market strategy, highlighted to CNBC the potential for a recession this year, attributing it to the rapid transmission of monetary policy changes. Despite this, Ashley suggests that if a recession were to occur, it would likely manifest in 2024 due to the typical lag effect of monetary policy. With the Fed maintaining interest rates in March and anticipated cuts in June, GSAM acknowledges the possibility for market corrections but remains cautious about the limited upside potential for U.S. equities.

India: Emerging Markets Growth Narrative

GSAM identifies India as a strategic long-term growth story amidst global economic slowdowns. Ashley underscores India’s potential for significant economic upswing, projecting robust nominal GDP growth rates. Despite recent market rallies, GSAM sees substantial upside potential in Indian stocks, particularly in small and mid-cap sectors.

Japan: Embracing Inflation as a Solution

In contrast to other major economies, the Bank of Japan’s recent policy shift to hike rates after 17 years indicates a departure from unconventional easing measures. Ashley emphasizes Japan’s unique approach to inflation as a solution rather than a problem, attributing it to increased pricing power for firms. GSAM regards Japanese equities as attractive both in the short-term and long-term, presenting significant growth opportunities.

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CREDIT: Doris Chinwe Omemgbeoji 

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