Goldman Sachs is super high on recovery this year. But what can go wrong here


US stocks are set to start a bumper week of earnings in a suppressed manner.

Apple AAPL,
+ 1.61%,
Tesla TSLA,
+ 0.20%,
Facebook fb,
+ 0.60%
And Microsoft MSFT,
+ 0.44%
All are ready to report earnings in an action-packed week, including the Federal Reserve’s first policy meeting of the Biden administration. In fact, about a quarter of the S&P 500 will report results – with companies representing 39% of the index by market value according to FactSet data.

COVID-19 focuses on the epidemic and the rollout of vaccines across the US as President Joe Biden finds work. Investors reading the US fourth-quarter gross domestic product (GDP) on Thursday will also be watching closely, with 4% growth expected by marketers. Attention will also shift to recovery in 2021.

In our Phone of the day, Goldman Sachs GS,
+ +%
Analysts stressed the rebound of the US economy in 2021, but said there were three major risks to recovery. This year the investment bank is forecasting GDP growth at 6.6%, 2.5 percent higher than the consensus. It brought through mass vaccination with fiscal support for consumer spending to promote a “midier consumption boom” and “very strong growth” in 2021, hoping to decrease the risk of the virus.

The most serious downside is that, as analysts noted, there was a risk of a new vaccine-resistant strain of coronovirus that causes COVID-19 – requiring a new vaccine and another round vaccine. “Hat-sensitive spending is likely to backfire while a new vaccine is developed, and although a new vaccine can be approved in less than five months, the consumption boom will likely decrease by 2022,” Goldman analysts Said, led by Jan Hatzius. In a note he said that preliminary evidence suggests that current vaccines protect against new UK stress, but were more mixed for the South African version.

The second most important fact about risk is that mutations of the virus “raise the bar” for herd immunity, either by being more contagious or by reducing the vaccine’s effectiveness. This scenario will also reduce consumption delays. Finally, even as vaccination rollout and hot weather reduce the spread of the virus, there is a risk that consumers will be more cautious than expected, although the downside will be limited, he said.

More encouragingly, Goldman’s 6.6% GDP growth forecast had some significant upside risks, including the rapid spending savings in households during the COVID-19 epidemic and the effects of further fiscal stimulus in 2021 Have gathered in

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This Morgan Stanley MS,
-0.76%
The chart shows the NFIB Small Business Optimization Index from the Russell 2000 RUT,
+ 1.28%
The index is up on small-cap stocks, suggesting that sentiment may be negative.

market

US stock futures YM00,
-0.57%

ES00,
-0.03%

NQ00,
+ 0.92%
Busy earnings pointed slightly ahead in the open at the beginning of the week. European shares also helped in early trading, earnings and reported acquisition by online retailers Boohoo BOO,
+ 4.21%
And ASOS ASC,
+ 5.30%.
Asian stocks climbed overnight, with some economies expected to recover from the COVID-19 epidemic with lockdown easing and vaccine rollout progressing.

The buzz

Biden’s top aides began talks Sunday with a group of liberal Senate Republicans and Democrats over a $ 1.9 trillion coronavirus relief package.

According to the report, after South Africa was included in the list, Biden would on Monday reinstate coronovirus travel restrictions against foreign nationals arriving from the US, Brazil, Britain, Ireland and Europe.

The White House on Monday unveiled details of the new Buy American executive order to be signed by the president. This would increase the range and price preferences for domestic goods before purchasing to the government from a non-US supplier.

According to UN data, China overtook the US as the world’s top destination for new foreign direct investment last year.

Just a few days before the fourth quarter earnings, Baird lifted its price target for electric car maker Tesla TSLA.
+ 0.20%
$ 488 to $ 728 per share, stating that “the bias for the stock remains upward,” in a note on Monday.

Gametop GME,
+ 51.08%
After climbing 51% higher on Friday, shares rose 42% in premarket trading. The profit fell on the videogame retailer after it was organized by short selling firm Citron Research and speculative buyers on Reddit.

AMC AMC,
+ 17.79%
The stock gained 34% in premarket trading, as the movie-theater chain raised $ 917 million in equity to help debt through the COVID-19 crisis.

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