Why is Goldman Sachs think that SPY shares can fall 20% from here News ad

A S&P 500 index Now celebrates Restoration 20% Since the minimums he made during the so -called “Liberation Day”, When President Trump released the first round Trading tariffs Almost every major trading partner engaged in the United States creates serious volatility and uncertainty in all directions. Despite the recent increase in rally from A successful agreement between the United States and ChinaSome there think that it will be short -lived.

Agreeing to put 90-day hold to these tariffsThe two largest economies in the world gave the stock market the second wind, especially for bulls.

However, Goldman Sachs strategists, including Global shareholder strategist Peter OppenheimerBelieve me, SPDR S&P 500 ETF TRUST NYSEARCA: Spy Faces are enough to risk the tail to potentially fall by 20% from current levels. Instead of reacting impulsively, investors can benefit from the consideration of their analysis.

These strategists are a good argument against S&P 500. Investors can find connections between their analysis and movements in other main classes of assets, including ISHARES 20 ETF treasury bond NASDAQ: TLT and some loud names in the technological sector, such as Nvidia Co. NASDAQ: NVDASome of them act as real fears for market promotion.

The main reason for the decline

Goldman’s chief economist, Jan Khaziusquotes that he sees 45% probability The United States economy falling into the recessive cycle, and the causes of this point of view are based on the extreme fundamental look. Despite the 90-day pause in these tariffs between the United States and China, today’s The remaining tariffs (And not only with China) is still much higher than they were just six months ago.

From them Global economic windcontrolled by tariffs, Profit (EPS) Profit In a wider S&P 500, one could decrease enough to threaten today’s levels of assessment in financial markets. And it is here that the next pillar in this thesis appears: estimatesField

A Advanced ratio of price and profit in NVIDIA shares Significantly diverged from the price of shares over the last quarter, which is never a good sign. Since these multiple estimates are reduced from the growth of shares price, investors may somewhat assume that the market begins to discount future revenues of shares for some reason.

Waiting to find out that this reason can often be useless, and you can fail to fight this topic Investors suggest that they know that the market is notWhich is also a useless effort most of the time.

Global financial markets are greater than just aiming on Nvidia Refusal of risk and safer assets instead of. This is when investors can pull out a gold schedule or SPDR Gold Alcs NYSEARCA: GLD As a potential proxy, which is also at hand.

A flight takes place in a safe place

Starting with goldInvestors can see the index ahead of the wider S&P 500 as much as 15% For the last quarter.

This price action is the initial factor indicating the readiness of the market to get out of more risky assets (for example, shares) and look for the historical safety of gold in Time of uncertainty and volatilityField

Another tracking topic in gold can be a share of $ 1.3 billion, which Vanguard Group has created in stocks Barrick Gold Corp. NYSE: b As of the beginning of May 2025.

This is a clear sign of interest by the participants of the Wall Schell, since the expectations are set for more streams in gold during this potential fall in S&P 500.

But this is not what the flight ends in a safe place. More capital flows into The main consumer products choose the SPDR fund sector NYSEARCA: XLPwhere investors can see up to 952 million dollars of institutional capital deployed in this Defensive basket During the last quarter (which consists only from April and May 2025).

On a wider economic basis S&P 500 seems to be one of the most expensive markets todayEspecially compared to other developing markets, such as China and Brazil, the assessments of which are much lower.

According to the reserve Market coefficients for GDPThe United States stands at 180%While China and Brazil are in 67% and 42%respectively.

Given that this is an indicator that Warren Buffett most of all, therefore, it is called “Buffete indicator”, For investors, it would make sense to see the legendary investor. sit in a record amount of money For the last quarter without any new signs or intentions to buy shares again in the near future.

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