JPMorgan, Goldman Share Opposing Views on US Stocks
New York: Two big firms, JPMorgan and Goldman Sachs have two pretty divergent opinions about what you should own in the US stock market right now. So far, the dollar is making the difference in who’s right. Custom indexes maintained by both banks give the advantage to Dubravko Lakos-Bujas, the JPMorgan chief US equity strategist who has been saying since December that companies that get most of their sales from abroad would do better than domestically oriented ones. Such multinational stocks are outperforming the broader market by almost12 percentage points in the past three months.
Lakos-Bujas’s bull case foresaw just about everything that has gone right for the stocks: a weakening dollar, stabilisation in China’s economy and a rebound in commodities. “We continue to like multinationals as their earnings likely will surprise to the upside over the coming quarters.”
On the flip side, Goldman’s chief US equity strategist, David Kostin, reiterated as recently as April 4 a May 2015 recommendation to buy the bank’s domesticthemed basket, while selling its international counterpart. It’s a bet that proffered a nearly 50% five-year return but is now fizzling out.
“A growing economy, rising rates and a stronger U.S. dollar benefit domestic-facing stocks,” Kostin wrote last month. — Bloomberg
ARINDAM Anna-Louise Jackson