GS: S&P 500 May Rise 20% on U.S. Growth

这波correction有多深， 看中国和爱尔兰。 QE3有意思。



The Standard & Poor’s 500 Index mayrise as much as 20 percent in 12 months and the dollar is poisedto climb as U.S. economic growth tops investors’ projections,Goldman Sachs Asset Management Chairman Jim O’Neill said.

The U.S. equity market will probably outperform the rest ofthe world and the dollar may strengthen 5 percent from currentlevels, O’Neill said in an interview in London today. TheFederal Reserve will engage in another round of bond purchases,or “QE3,” if its current program fails to revive growth in theworld’s largest economy, O’Neill said.

The S&P 500 is little changed since Nov. 3, when the Fedsaid it would buy $600 billion of Treasuries, adding to anearlier $1.7 trillion asset-purchase program known asquantitative easing that’s designed to cut unemployment andavert deflation. The Dollar Index, which tracks the U.S.currency against those of six trading partners, rose 3 percentduring the period.

“If QE2 doesn’t work, then we’ll get QE3,” said O’Neill,who was named chairman of the money manager in September afterworking as the co-head of global economics research and chiefcurrency economist at New York-based Goldman Sachs Group Inc.since 1995. There’s a “good chance” the S&P 500 will rise 15percent to 20 percent in the next 12 months, he said.

Goldman Sachs Asset Management oversaw about $820 billionas of Sept. 30.

China Slowdown

The S&P 500 has climbed 7.4 percent this year, following a23 percent rally in 2009, as the U.S. economy rebounded from theworst global financial crisis since the Great Depression. Agovernment report yesterday showed sales at U.S. retailersclimbed in October by the most in seven months, brightening theoutlook for holiday shopping even as unemployment holds near 10percent.

“The U.S. economy is actually doing a bit better thanpeople had thought so we might go through a phase here wherepeople think the Fed might actually not have to deliver much ofQE2,” he said. “If I’m right, the dollar will strengthen.”

China’s government may target a slower annual economicgrowth rate of 7 percent in its next five-year plan, which might“shock” commodity markets, O’Neill said.

“Particularly in the commodity world, the whole game planof the last decade” was based on rising demand from China, hesaid. “I think that game is in the process of changing.”

Today’s tumble in Chinese stocks that sent the ShanghaiComposite Index down 4 percent to a one-month low may still be abuying opportunity for long-term investors, he said.

‘Buying Opportunity’

“From a big-picture perspective it is a buyingopportunity, but whether we saw the bottom this morning I don’tknow, because the Chinese need to make sure inflation doesn’tpick up much,” O’Neill said.

Chinese Central Bank Governor Zhou Xiaochuan said today thecountry is under “pressure” from capital inflows and a state-run newspaper said price controls may be imposed to cool thefastest inflation in two years. Crude oil and copper futuressank more than 1 percent on concern Chinese demand will weaken.

O’Neill, 53, created the BRICs acronym in 2001 to describethe rising power of large emerging markets in Brazil, Russia,India and China.

The probability of a breakup of the euro is “no longerzero,” O’Neill said. Ireland is in talks with Europeanand International Monetary Fund officials about a bailout thatwould shore up the state’s finances as well as enable it toinject capital into the country’s banks, said a Europeanofficial with direct knowledge of the talks.

The Irish turmoil marks a new stage in a sovereign-debtcrisis that was triggered by Greece and threatened to break theeuro region apart in May. The euro has weakened 9 percentagainst the dollar during the past year.