Can 2022 get worse for the US stock market?

U.S. equities are volatile. What's the outlook ahead? --------------------------------------------------------------- U.S. equities are volatile. What's the outlook ahead? Plus: Make the future green, say our interns, 68% of whom are [willing to spend more on environmentally friendly products](. Read all the top GS intelligence below. (Was this newsletter forwarded to you? [Sign up now.]( --------------------------------------------------------------- What's ahead for U.S. equity markets It's been a bleak year for the U.S. stock market which, despite some short-term rallies, is still firmly entrenched in bear market territory. “The clarity on inflation is critical,” says David Kostin, chief U.S. equities strategist for Goldman Sachs Research, in the latest episode of [Exchanges at Goldman Sachs](. Expect equities to move higher (and volatility to decline) when the path of inflation is clearer. “A source of great uncertainty is around the path of inflation,” Kostin tells host Allison Nathan. “And that is also going to carry over into the path of the equity market.” Investors are moving from a TINA (there is no alternative) to a TARA (there are reasonable alternatives) mindset. With the rise in short-term interest rates, cash is starting to look relatively more attractive as an investment, Kostin says. “With the interest rates on short-term cash positions starting to approach 4%, [cash has] a pretty attractive rate of return…compared with the risk-adjusted returns you're going to be getting in [the] equity market.” “This earnings season will be very consequential,” Kostin says, adding that corporate margins are anticipated to decline. “[That's] not something we've seen for some time. And the idea of a decline in margins is definitely not anticipated by the consensus expectations.” Subscribe wherever you get your podcasts [Spotify]( | [Apple]( | [Google]( | [Stitcher]( --------------------------------------------------------------- After almost eight months of war in Ukraine, what now? Russia's invasion of Ukraine has roiled Europe since the war started almost eight months ago. It isn't likely to be over anytime soon, according to former U.S. Secretary of Defense, Honorable Ashton Carter. There will likely be a lot of “slugging and slogging,” without a dramatic change or breakthrough in the situation over the next year, says Carter in a conversation with Sharmin Mossavar-Rahmani, head of our Consumer and Wealth Management Investment Strategy Group. He sees a 75% probability that Russia-Ukraine is a “frozen conflict,” with only a 10-15% chance of a breakthrough for Ukraine. The probability of decisive developments in Russia's favor are also small, Carter says. --------------------------------------------------------------- Bearish sentiment across the board With financial markets facing a number of headwinds, ranging from a hawkish Federal Reserve to increased geopolitical risks, bearishness is growing across the investor community, according to the latest Marquee QuickPoll, which surveyed more than 1,300 institutional investors globally in early October. Key findings include: - Investor sentiment is only slightly above its lowest point since the QuickPoll survey was launched in 2016. Investors continue to expect weaker asset prices in the form of lower equities and higher rates. - For October, investors are most focused on U.S. economic data, given the implications for Fed policy and its global ramifications. - From a risk perspective, investors are most worried about a resumption of the bear market, with only a small fraction saying they feel vulnerable to a move higher in risk assets. Investors are also bearish about the U.K. and China. [Click here for more insights](. --------------------------------------------------------------- The majority of American retirees are falling short in their retirement income A large percentage of retirees have not successfully prepared for life after work, according to Goldman Sachs Asset Management's [Insights Report]( with more than half of retired survey respondents saying they are receiving less than 50% of their pre-retirement income. It is commonly suggested that 70% of pre-retirement income is needed to maintain one's standard of living in retirement. Only 25% of retired respondents say they have more than 70% of pre-retirement income in post-work life. [Learn more from the findings here.]( --------------------------------------------------------------- How Goldman Sachs interns see the world Goldman Sachs' 2022 class of summer interns came from more than 600 schools and worked at 45 of our offices around the world. For the past seven years, we've asked our interns for their perspectives on everything from their future goals and investment outlook, to their spending behaviors and workplace preferences. Key findings from this year's 2.4K respondents include: - 35% of interns plan to retire between the ages of 55 and 65, while 29% want to keep working at long as they can. - 73% of our interns are invested; their top three preferences are stocks, exchange-traded funds and crypto, while 27% are not invested at all. - 57% believe success looks like the freedom to pick up and relocate at any time, while 43% think it means being able to put down roots, such as being a homeowner. - 99% of our interns believe relationships are best formed in person. In 2020, 75% had said the pandemic and remote work negatively impacted their ability to foster relationships. For more, [view the infographic](. --------------------------------------------------------------- BRIEFINGS Brainteaser: Job vacancies are drying up The U.S. jobs-workers gap — the difference between the number of job openings and the total number of unemployed workers — has narrowed substantially, according to Goldman Sachs Research. This shrinking gap has largely been driven by a fall in job openings since they hit their peak in March this year. How much have vacancies declined since then? A) 1.1 million B) 1.5 million C) 1.7 million D) 1.8 million [Check the answer here.]( --------------------------------------------------------------- ICYMI: In the media [CNBC]( October 12 [86% of Gen Z interns think a recession is coming — and it's changing their approach to their careers]( [CNBC]( October 12 [Cost of capital increase will leave low-quality balance sheets vulnerable, says Goldman strategist]( [Bloomberg]( October 11 [Goldman's Ota on Japan border reopening]( (6:31) --------------------------------------------------------------- --------------------------------------------------------------- Some of the images used in this newsletter are sourced via Getty Images. 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. Goldman Sachs believes the data in this newsletter is accurate, but does not verify its accuracy independently and does not warrant or guarantee that it is accurate or complete. Goldman Sachs has no obligation to provide any updates or changes to the data. No investment decisions should be made using this data. To the extent this newsletter includes material from the Goldman Sachs Global Markets Division, please [click here]( for information relating to Global Markets Division material and your reliance on it. To the extent this newsletter includes material from Goldman Sachs Asset Management, please [click here]( for additional disclosures. 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