‘Key Risk’ To Stocks Is Taxes, Not Peak Growth: Goldman

‘Key Risk’ To Stocks Is Taxes, Not Peak Growth: Goldman

The biggest risk to US equities isn't peak growth. It's higher taxes. That's the message from Goldman's David Kostin, who raised his S&P target last month, after a blockbuster Q2 reporting season forced Wall Street strategists to reassess at least one key fundamental input. To be sure, the growth outlook has deteriorated. Indeed, Goldman recently cut their forecast for the US economy, in part due to what the bank called "a harder path ahead" for the consumer. Read more: US Consumer Faces
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One thought on “‘Key Risk’ To Stocks Is Taxes, Not Peak Growth: Goldman

  1. I don’t want to defend current market valuations. But I would find it amusing if the triggering event for a crash or correction is a change in rates, particularly at the corporate level. An increase in the statutory rate from 21% to 25% would cause some increase in actual taxes paid for many corporations, but not nearly as much as the 4% hike would suggest. Many highly valued corporations pay little or no US income tax. (And, of course, the entire discussion assumes that most investors value corporations on the basis of discounted future after tax cash flows, which increasing feels like an assumption that a minority of old people like me make.) Changes in capital gains rates also do not seem to be great indicators of changes in market valuations. I’m not great at predicting the future. Goldman may very well be right. Maybe the next step in the story is that the market does the right thing for the wrong reasons.

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