Rising Powell Goldman sent the S&P 500 down. one more time.

Well, now “Jay Powell Go Greer” would be more appropriate. A favorable monetary vigilance for the trader has become a bearish interest rate hike.

Investors are not happy either. NASDAQ COMPOSITION COMP,
-6.15%,
A variety of rich stocks – Apple, Tesla, Nvidia – previously popular with short-term option buyers, have fallen 29.3% this year, and again flirted with summer lows. The latest AAII sentiment survey shows every trader is the most pessimistic since 2009.

Now, Goldman Sachs is citing Powell’s proposed rate hikes to lower the S&P 500 SPX.
-0.84%
Year end goal 4,300 to 3,600.

“The expected interest rate path is higher than we currently think,” David Costin, Goldman’s chief U.S. equity strategist, said in a note.

When Goldman cut its price target for the S&P 500 in May from 4,700 to 4,300 (it started the year at 5,100), the market predicted the Fed would end its hike cycle at 3.25%. Traders now expect the terminal rate on call to be 4.6%, and Goldman economists see the Fed funds rate as high as 4.75% next spring.

That’s pushing the real 10-year Treasury yield up sharply, and Goldman said it rose to 1.3% from 1.1% at the start of the year, the highest since 2011. before reaching a peak of 1.5%. That doesn’t bode well for stocks.

“The relationship between stocks and prices is volatile,” Costin said. “Drivers of changes in real yields will determine the impact on equity prices. The index’s weighting of high-growth technology companies has increased its duration and momentum sentiment.”

The S&P 500’s price/earnings ratio, which was 21 at the start of the year when real interest rates were negative, is currently down to 16.

“However, over the past few weeks, the correlation has been broken; equity valuations have declined from their recent highs but are still trading above levels seen in recent correlations to real yields. Based solely on recent correlations to real yields, the S&P 500 Index is It should be trading at a multiple of 14x instead of a multiple of 16x,” says Costin.

Hence its depreciation. The good news is that 3,600 is another 4.1% lower than Thursday’s close. And Costin estimates a year-end rally to 4,300 “is possible if inflation shows clear signs of easing.”

The bad news is that Goldman thinks risks are skewed to the downside. Stubborn inflation, and therefore a persistently aggressive Fed, could lead to recession. Goldman economists have a 35% chance of that happening in the next 12 months.

“During a recession, incomes fall and the output gap widens, pushing the index toward the 3150 trough,” says Costin.

Markets

Wall Street faces another down day with the S&P 500 futures contract ES00.
-1.41%
1% to 3735 discount. 10-Year Treasury TMUBMUSD10Y;
3.807%
5.4 rose to 3.769%. WTI oil futures CL.1 on fears of global slowdown
-3.57%
It fell 2.1% to $81.70 a barrel.

The noise

Dollar Index DXY,
+ 0.79%
EURUSD moved above 112 for the first time in 20 years, on worries about the European economy and Italian elections;
-0.87%
Less than $0.98.

Economic data due Friday includes the S&P flash and US manufacturing and services PMI reports, both released at 9:45 pm Eastern. The U.S. central bank will host its “Fed Listens” event starting at 2 p.m. ET, with a keynote address by Chairman Jay Powell.

The early season Grinch award goes to Dirk Willer at Citigroup, who predicted that investors shouldn’t expect a Santa Rally this year.

The UK’s new chancellor, Kwasi Kwarteng, presented a small budget on Thursday. Buoyed by bogus theory, he promised cuts in income and property taxes and raised six-month energy spending to 60 billion pounds ($67 billion). The United Kingdom’s perceived fiscal imbalance yielded a gilt TMBMKGB-10Y;
3.808%
GBPUSD to 12-year high and still impressive;
-1.95%
It hit a 37-year low.

Shares in Credit Suisse CSGN;
-9.73%
It plunged more than 8% on reports that the bank will need to raise more capital as it seeks to restructure, a new multi-year low.

The best of the web

Covid-19 fraud could be worth more than $45 billion.
Why can’t business buy peace?
Which is worse for you: inflation or recession

The table

Over the past 12 months, more than half of the session’s closing bells “were accompanied by sad trombones,” Benedek Vross, director of S&P Dow Jones Indices, said in a note published Thursday morning. In such a frenzy, investing in stocks with low volatility would be a better choice.

“For discerning followers of the factors, S&P 500 Low Volatility is somewhat of a glimmer of hope. “Low Vol has held up against the downside, posting a positive 12-month return of 1.2%, compared to a loss of 11.6% for the S&P 500,” he said.

High tickers

Here are the most active stock market tickers on MarketWatch as of 6 am Eastern.

Ticker	Security name
TSLA, -4.06%	Tesla
GME -8.04%	Stop the game
AMC, -8.72%	AMC Entertainment
AAPL, -0.64%	Apple
NO, + 0.27%	NIO
AVCT, + 44.69%	American virtual cloud technologies
BBB -2.48%	Bed bath and beyond
monkey, -10.05%	AMC entertainment is preferred
NVDA, -5.28%	Nivea
AMZN, -1.04%	Amazon.com

It is read randomly

The relationship between Yoda and Miss Piggy
Wait below
Cheap Disney Princess.

What we need to know starts early and will be updated right up until the opening bell, but sign up here to get it delivered to your inbox once. The emailed version will be sent around 7:30 am Eastern.