Recently, concerns about stagflation in the United States have been growing, but strategists at some big Wall Street banks do not seem to think so, saying that now is a good time to buy bottom US stocks.
"despite the short-term uncertainty, we expect the stock market to continue to rise because investors are confident that the current upward pace of inflation is temporary," Goldman Sachs strategist (Goldman Sachs Group Inc.) strategist David J. Kostin wrote in a recent note to clients.
JPMorgan Chase & Co. headed by Mislav Matejka Strategists agree, pointing out that concerns about stagflation will begin to subside.
Last week, concerns about soaring prices and fears that the post-epidemic recovery had passed its peak dragged the s & p 500 down 5 per cent from its September record, having not seen such a massive correction in nearly a year.
The decline continued this week, with the s & p 500 down 0.69% at $4361.19 as of Monday's close. Persistent supply bottlenecks, coupled with a slowdown in the US economic recovery, have raised questions about whether stock valuations can push up further.
According to a survey of market professionals by Deutsche Bank (Deutsche Bank AG), most of them believe the stock market will recover by at least another 5 per cent by the end of the year. According to the latest survey released on Monday, there is a "fairly strong consensus" that some kind of stagflation is more likely.
But Goldman Sachs and JD Morgan have a completely different view. "We think this decline will prove to be a good buying opportunity because there has often been a 5 per cent correction in the past," Goldman Sachs strategists said. "
"after 330 days without a correction of more than 5 per cent, we finally see some weakness, but we do not expect this to continue and recommend buying at lows," JD Morgan strategists wrote in the report.
On the other hand, some big Wall Street banks, including Goldman Sachs and JD Morgan, also pointed out that the current rise in consumer prices, mainly driven by soaring energy costs, will be temporary. They argue that central banks may consider higher energy prices rather than overreact.
"the surge in energy prices will slow economic growth, but in our view it is not enough to trigger a recession," they wrote. "Energy prices are likely to remain stable or moderate next year."
