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Goldman Sachs has downgraded stocks.
"We downgrade to neutral over 3 months as a sell-off in bonds could lead to a temporary sell-off in equities," write Goldman Sachs' portfolio strategy team led by Anders Nielsen. "This makes the near-term risk/ reward less attractive despite our strong conviction that equities are the best positioned asset class over 12 months, where we remain overweight."
Over the next three months, Goldman expects equities to return 1.8%, but over the next 12 months stocks still appear poised to return 10.5%.
"Growth has improved substantially," they wrote. "Most of the acceleration we had expected is now behind us, but we expect growth to be sustained at current or slightly higher levels, with the US growing at around 3% through 2017. We think the likelihood of a rise in government bond yields has increased and see this as a key aspect of the near-term macro outlook."
This outlook is a short-term view for Goldman, but shows the firm viewing the upcoming stretch leading us out of earnings and the summer as a potentially vulnerable time for the market.
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