Episode Summary
Executive Summary: Peter Oppenheimer says 2021 should mark a transition from a vaccine- and policy-driven market rebound to a growth-led bull phase. Goldman forecasts strong global recovery, with supportive fiscal and monetary policy, rising profits, and broader equity participation beyond U.S. growth stocks, though volatility may persist during the transition.
Main Topics: Global growth outlook for 2021 (Priority: 5/5): Goldman projects a strong but uneven recovery in the global economy, driven by vaccine progress and exceptionally supportive policy. US fiscal stimulus and growth (Priority: 5/5): The size and timing of US fiscal support will depend on political outcomes, but even a smaller package should bolster growth and consumer demand. Bear market collapse and V-shaped rebound (Priority: 4/5): The pandemic created an exogenous shock that caused a historic market drawdown, followed by an unusually rapid rebound supported by policy. Hope-driven to growth-driven bull market (Priority: 5/5): Markets are seen moving from valuation-led optimism in 2020 to earnings-led expansion in 2021 as profits recover. Broader equity leadership beyond the US (Priority: 4/5): The next phase should feature more diversified returns across regions and sectors, including cyclical and value stocks. Low-rate environment and asset support (Priority: 4/5): Near-zero policy rates and negative real rates are expected to remain in place for years, sustaining risk assets.
Key Arguments: Global growth in 2021 is expected to reach 6%, above consensus, implying a strong recovery from the pandemic recession. US growth is forecast at about 5.3%, supported by consumer savings, pent-up demand, and fiscal stimulus. The recession was caused by an exogenous shock, not by internal financial imbalances, which helps explain the speed of the rebound. Extraordinarily supportive monetary and fiscal policy reduced structural damage and reinforced investor confidence. The market’s 2020 rally was mainly hope- and valuation-driven, while 2021 should become growth- and earnings-driven. Global profit growth is expected to accelerate materially, supporting the longer phase of the bull market. Future returns should be more evenly distributed across geographies and sectors, with value and cyclicals likely to rebound as growth and inflation normalize.
Data Points: Global GDP growth forecast for 2021: 6% - Goldman Sachs forecast cited by Peter Oppenheimer for the global economy next year. Current global consensus growth: a little more than 5% - Oppenheimer says Goldman is above consensus. US GDP growth forecast for 2021: around 5.3% - Supported by expected fiscal stimulus and consumer strength. Expected US fiscal boost: about $1 trillion - Base case expectation for late 2020 or early 2021. Potential US fiscal boost with Democratic Senate: in excess of $2 trillion - Dependent on election outcomes and Senate control. Consumer savings behavior: quite sharply increased - Savings rose during the pandemic, creating pent-up demand. Expected US annualized growth in Q2 2021: 7% - Forecast for strong rebound once winter infection pressure eases. Expected US annualized growth in Q3 2021: 6% - Continued rebound in the second half of 2021. Global profit growth forecast for 2021: around 35% - Used to support the case for the growth phase of the bull market. Profit decline in 2020: about 20% - Provides the base from which profits recover in 2021. Central bank rates outlook: around zero well into 2025 - Policy rates expected to remain very low for an extended period.
Pivotal Quotes: "we are optimistic, both equity markets, risk assets, and indeed the economy" — Peter Oppenheimer: Opening statement on Goldman Sachs' outlook for 2021. "we think we are moving into what we call the growth phase" — Peter Oppenheimer: Explaining the shift from valuation-led recovery to earnings-led bull market expansion. "2021 should be a year of pretty good returns overall, but ones which are more evenly distributed" — Peter Oppenheimer: Conclusion on expected market performance across regions and sectors.
Implications: Listeners should expect a strong but uneven 2021 recovery: equities can still rise, but leadership may broaden beyond US mega-cap growth into cyclicals and value. Policy support and low rates remain key tailwinds, while volatility may accompany the transition to earnings-driven gains.
About Goldman Sachs Exchanges
In each episode of "Exchanges," people from the firm share their insights on developments shaping industries, markets and the global economy.