WHEREAREWEINTHEMARKETCYCLE?ISSUE75|February4,2019|5:35PMESTEquityResearchGlobalMacroResearchInvestorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision.ForRegACcertificationandotherimportantdisclosures,seetheDisclosureAppendix,orgotowww.gs.com/research/hedge.html.TheGoldmanSachsGroup,Inc.Riskassetshaverecoveredalargeshareoflastyear’slosses,butsentimentstillseemslessebullientthanoneyearago,andinvestorsremainnervousaboutslowinggrowth.Againstthisbackdrop,howtointerpretrecentpriceaction—andwhetheritsignalsaturningpointformarkets—isTopofMind.Wesitdownwithlong-timeinvestorHowardMarks,whobelievesthatlastyear’srepricingreflectedacorrectionofexcessiveexuberanceratherthanamaterialchangeinthefundamentalbackdrop.Giventheriskrallysofarthisyear,hebelievesinvestorsarebacktobeingrelativelyoptimisticandrecommendsacautiousstance.GSeconomistsandstrategistsgenerallyagree,findingthateconomiccycleshavebecomesmootherandlessforward-looking,leavingsentimentakeydriverofmarketvol.Whiletheydonotbelievethecurrentbouncewillgivewaytoasustainedbearmarket,theyexpectaperiodofrelativelylowreturnsacrossriskyassets,andhighvol-of-vol.Themostimportantdriverofrisksentimentwillbethemarket’scontinuedcomfortlevelwiththestanceofmonetarypolicy.-CharlieHimmelberg“Idon’tbelievethatwe’reinabubble,andIdon’tthinkwe’regoingtohaveacrash...Butforaninvestor,Ithinkthenextfiveyearssimplyaren’tgoingtobeasgoodasthelastten.-HowardMarks“INTERVIEWSWITH:HowardMarks,Co-FounderandCo-Chairman,OaktreeCapitalMgmt.CharlieHimmelberg,ChiefMarketsEconomist,GoldmanSachsPeterOppenheimer,ChiefGlobalEquityStrategist,GoldmanSachsDIVORCEDFROMA“BORING”REALITYJeffCurrie,GSCommoditiesStrategyResearchLESSONSFROM2018VIXSPIKESRockyFishman,GSEquityDerivativesStrategyResearchRISKYRISKAPPETITEREVERSALChristianMueller-GlissmannandAlessioRizzi,GSMulti-AssetStrategyResearchWHAT’SINSIDEofAllisonNathan|allison.nathan@gs.comTOPMINDMarinaGrushin|marina.grushin@gs.com...ANDMOREDavidGroman|david.groman@gs.comIdon’tth...
