Here is the Goldman base case for a soft landing. Did it ever make any other kind?
While recent economic data in the US have sent mixed signals, the growth outlooks in China and Europe have improved markedly. Our economists upgraded their GDP forecasts in both regions and no longer expect a Euro area recession this winter. Since mid-October, the trade-weighted USD has declined by 7%. Better global growth and a weaker USD would represent modest boosts to S&P 500 EPS. Across sectors,Info Tech and Energy derive the highest share of sales from abroad but other macro drivers will be more important. China-and Europe-exposed stocks have moved to price the improved growth outlook. We expect non-US equities to outperform the S&P 500 in 2023, and many clients agree.
No doubt, China is about to recover. But, in my, view the bounce will lack some critical components. The first is real estate which is still plunging and infrastructure which must fall simply because it was so high last year. The ounce will be consumer-led.
