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David Kostin is listing his six baseline assumptions for 2021, that are starting to feel somewhat consensus already. The big question is of course how much of this is priced in or if stocks really rally to >4000 if the below materializes. Know your consensus.
(1) At least one vaccine is administered to a large portion of the US population during 1H 2021.
(2) Federal government remains divided. Republicans maintain control of the Senate
(3) The US economy continues its “V-shaped” recovery into next year.
(4) S&P 500 profits rebound sharply. We forecast a 29% jump to $175 in 2021, which is 5% above the bottom-up consensus expectation of $168
(5) The Fed remains on hold for several years with a stable funds rate of 0-25 bp. In fact, Goldman Sachs Economics projects no hike until 2025 – a full five years from now.
(6) The yield curve steepens, but only modestly. Our strategists expect the 10-year US yield will increase to 1.3% at the end of 2021 and 1.65% at the end of 2022.