Goldman Sachs Makes The Call - Part II

CNBC’s HALFTIME REPORT just completed an interview with Mr. Jan Hatzius, the respected Chief Economist at Goldman Sachs.

It was clear that the host Scott Wapner wanted answers to the same questions we had last night, specifically why did GS call for a well-publicized market short yesterday and why is this coming after bullish interviews given by senior GS managers for months?

He was unable to get those answers except for a rather vague “stocks are not expensive but the soft data has become an issue recently.”

But Mr. Hatzius did have some other observations, to paraphrase here:

-The impact of the extension of “Twist” by the FED will not majorly impact jobs growth and that is a major current consideration.

-If the FED doesn’t announce new QE or further guidance of a longer ZIRP policy, the ending of “Twist” combined with the end-of-year fiscal cliff will be problematic…(but he seems to think they will). His words, “The FED took substantive action but ultimately will have to do more, but it may take further downward revisions to GDP and jobs growth.”

-GS is more skeptical now than before on GDP growth and jobs than earlier in the year, so the call for weakness in the markets “is not inconsistent” with the economic research side of the house.

Nothing earth-shaking here like yesterday’s client note by GS, but perhaps gives a more considered and less dramatic view of GS basically saying “we are cautious now on the U.S. economy”.

Here's a link to The Original Goldman “Call”

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David W. (aka The Underground Trader)

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