The stock market has hit new heights. Investors are jazzed about Trump’s election as they believe he will be good for the corporate bottom line and the economy. But Goldman Sachs is warning that the market is going to correct itself as Donald Trump’s plan to bring back jobs and to create a more robust economy isn’t going to happen anytime soon. Republicans haven’t found one plan that they can get behind and Trump has yet to put one on the table.
According to the Levin Report, the market’s optimism is based on, “the hope that Trump will deliver on tax reform and other pro-growth initiatives, and that such policies will outweigh his more, let’s just call it, erratic behavior.”
CNBC’s Jeff Cox is reporting that David Kostin of Goldman Sachs “sees a dichotomy between investor hopes and the reality on the ground, and says it’s indicative of “cognitive dissonance” in the market.
According to Kostin: “On the one hand, investors, corporate managers, and macroeconomic survey data suggest an increase in optimism about future economic growth. In contrast, sell-side analysts have cut consensus [full-year] adjusted [earnings per share] forecasts by 1 percent since the election and ‘hard’ macroeconomic data show only modest improvement.”