Goldman says that the increased probability of an approved vaccine by the end of the month of November is underpriced as of now by the equity markets, and bu that time, the result of the US election is supposed to be known by then, as per the sources from the strategists including that of Kamakshya Trivedi in a note that was upheld on Wednesday. It is being said that the investors should count the risk of a successful COVID 19 vaccine unsettling the market by sparking a sell-off in bonds and thus, the rotation out of technology into cyclical stocks will be led, as warned by Goldman Sachs Group Inc.
Goldman Sachs will Bullish after COVID-19 Vaccine
Investors are also being said to know about the start of the school year which is going to have an impact on the spread of the COVID 19. It is further said that the approval of the vaccine could “challenge the market assumptions,” and this would be an issue regarding both the cyclicality and also about the eternally negative real rates. Also, in such a scenario, it is being said that the team will support steeper yield curves, traditional banks and cyclical while challenging the leadership abilities of the technology stocks.
Furthermore, it is being said that it will happen along with a change in the US Administration which is going to serve as a benefit for the emerging market equities. The strategists even have their opinions about the vaccine saying that the investors would be too early in deciding the position for themselves aggressively for such a shift. They recommend options for the trades as a way to play the theme.
As for example, some call options that are being provided on the S & P 500 will still look attractive and the Goldman seems to witness an upside to approximately 3,700 level had there been an early vaccine. This us also being compared with a potential downside target of that of 2200 had there been a significant reversal of activity from the second wave of Coronavirus. The US benchmark has thus, closed itself under 3328 on Wednesday. Last but not the least, it is said that thd range of outcomes is wide and our highest confidence still seem to lie in the ongoing US Dollar weakness.