Solving the Bubble Puzzle...Europe's Economic Recovery...China's Beauty Market

[Goldman Sachs]( [BRIEFINGS] April 1, 2021 Solving the Bubble Puzzle The stock market is trading near all-time highs; global equities have seen their largest quarterly inflows on record; and corporate activity in IPOs, SPACs and M&A is surging. While signs like these might raise concerns that investors are caught in the grip of irrational exuberance, the risks of an imminent bubble with systemic risks are relatively low, says Peter Oppenheimer, chief global equity strategist and head of Macro Research in Europe, in an episode of Exchanges at Goldman Sachs. Today’s market conditions are based on strong fundamentals, says Oppenheimer, with robust household balance sheets and relatively low levels of leverage in the private sector. And while recent growth has been led primarily by mega-cap tech companies, Oppenheimer says it would be wrong to draw direct comparisons to the tech bubble of the late 1990s. Yes, mega-cap tech stocks have become very large, but “that's not unique in periods of significant technological innovation in history,” he says. “Being large and seeing strong price appreciation is not the equivalent of being a bubble, I think, because these [stocks] have actually been very profitable parts of the market.” [Listen to podcast]( SHARE: [twitter]( [facebook]( [LinkedIn]( [email](mailto:?subject=Solving%20the%20Bubble%20Puzzle&body=https%3A%2F%2Fwww.youtube.com%2Fwatch%3Fv%3DC5ch_mBQMIM) The Daily Check-In with Goldman Sachs Above: Jari Stehn and Christine Cho of Goldman Sachs Research Europe is poised for a strong economic recovery as lockdown restrictions lift—albeit at a staggered pace, says [Jari Stehn]( Goldman Sachs’ chief European economist. Growth in the UK is expected to pick up the fastest, given the speed of reopening and vaccine rollouts. “We think we're set for a very strong rebound in the UK in the second quarter and expect the annual growth number for 2021 to be 7.1%, which is quite sharply above where the consensus is,” says Stehn. For the broader Euro area, he also expects above-consensus growth, with significant regional variation in the recovery timeline. “We expect Germany to return to the pre-pandemic level quite a bit earlier than the southern European economies,” Stehn says, pointing to its greater fiscal stimulus, industrial-oriented economy, and head start in the reopening process. “So as a result of that, we think Germany will return to the pre-COVID level of activity already in the third quarter of this year, whereas Italy and Spain are lagging behind by roughly six months in our forecast.” In another episode of The Daily Check-In, Goldman Sachs Research’s [Christine Cho]( shares her forecast that China’s beauty market—one of its fastest-growing consumer categories—will grow 22% this year. “We expect another record year for China beauty consumption driven by solid offline recovery, as well as ongoing online penetration,” she says. The depth and breadth of beauty e-commerce has expanded notably amid the pandemic, and consumers are also using a greater number of platforms to purchase their personal care products, with limited overlap between shoppers of major sites. “This is actually a great opportunity for digital-savvy companies to reach a refined set of consumer targets as well as maximize their reach into some of the consumers that they haven't been able to reach historically,” Cho says. [Watch videos]( SHARE: [twitter]( [facebook]( [LinkedIn]( [email](mailto:?subject=The%20Daily%20Check-In%20with%20Goldman%20Sachs&body=https%3A%2F%2Fwww.youtube.com%2Fplaylist%3Flist%3DPLIyiGQywEp65ogt2Bi3vTK7ngXDTM6wT9) Talks at GS with MIT Professor Sherry Turkle Above (L to R): Bentley de Beyer of Goldman Sachs and Sherry Turkle, MIT Professor and author of The Empathy Diaries A pioneer in the intersection of technology, empathy and ethics, MIT professor Sherry Turkle has shaped our understanding of the way people express themselves through technology. “From the very beginning I used words like ‘intimate machine,’ ‘computer as Rorschach.’…I was there when Steve Jobs brought the Apple II to MIT and people just wanted to touch it...People just wanted to project their mind onto it,” she recalls in a recent episode of Talks at GS. But Turkle’s academic focus on the connection between humans and computers was initially met with deep skepticism, as she describes in her recent memoir, The Empathy Diaries. “With my psychological training, I was getting that very emotional feeling from people when they talked about computers. And I would tell the engineers around me, ‘This is what I’m studying now.’ And they would say…‘what a waste. You’re not going to get tenure. The computer is just a tool,’” she reflects. “I mean, we all know that the computer is not just a tool. It’s the emotional, kind of psychic center of our lives for good and for bad…That’s where I give myself…credit for persistence, obstinance…Once I decide something is interesting, I’m going to figure that puzzle out.” [Watch video]( SHARE: [twitter]( [facebook]( [LinkedIn]( [email](mailto:?subject=Talks%20at%20GS%20with%20MIT%20Professor%20Sherry%20Turkle&body=https%3A%2F%2Fyoutu.be%2F7zgr6wGrwxo) Goldman Sachs Media Highlights CNBC - March 31 [Goldman Sachs is Close to Offering Bitcoin and Other Digital Assets to Its Wealth Management Clients]( Commercial Observer - March 29 [Goldman Sachs’ Urban Investment Group’s New Heads Kick Off With Harlem Project]( American Banker - March 29 [Where Goldman, Citi, JPMorgan Are Putting Fintech Investment Dollars]( CNBC - March 29 [Goldman’s Jeff Currie Says There’s Room for Gold and Bitcoin to Coexist]( (3:05) [Subscribe]( [Unsubscribe]( The data provided in this newsletter is for information purposes only and should not be construed as investment or tax advice nor as a recommendation to buy, sell, or hold any particular security. 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