“U.S. economic data has been improving notably. And the U.S. stock market is near its all time high. However, Goldman economist Jim O’Neill is getting increasingly concerned that the stock market is getting expensive,” Sam Ro wrote in a Financial Post article today. Ro continued, “In the near-term, he thinks momentum could drive stocks higher. But we warns that valuations are getting rich.” The Financial Post business insider later quoting O’Neill’s latest public ‘Viewpoints’ Goldman Sachs Asset Management news letter which stated, “The strength of last week’s US data is leading the consensus to revise upwards their forecasts for 2013 real GDP. Having been notably higher than the consensus since autumn 2012, GSAM is rather pleased about that as a number of investment strategies have prospered from it. Of course, and as I discussed last week and in recent Viewpoints, this is despite the ongoing and sometimes unchosen fiscal tightening in the US, and is a marked contrast to Europe. Not surprisingly, all of the US bond, equity and currency markets are reacting accordingly. I am not that confident about what happens next and as to whether all these trends are going to continue, not least because May is now less than two months away and the infamous ‘Sell in May and go away, come back on St Leger’s Day’ (which I am physically actually going to be doing post retirement, of course!). US equities seem set to strengthen further in the near term, given the momentum in the data, but as page 47 shows, they are hardly bargain basement these days from a CAPE perspective.” The Financial Post article can be found here. | Raymond Matt, CFP, CLU, TEP, CHS
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