Monday, October 24, 2022

Goldman Sachs Rapes The Muppets

From Bloomberg via Yahoo Finance, October 18, 2022:

Goldman Says Sell S&P 500 Calls to Fund Bullish China View

Goldman Sachs Group Inc. said investors should sell S&P 500 Index calls and fund buying of the same options on the Hang Seng China Enterprises Index to position for a likely catch-up in battered China-related assets.

“Sentiment on China-exposed assets has remained subdued this year and did not mirror the risk appetite rebound during the summer,” undershooting a measure of investor mood for global growth, strategists including Christian Mueller-Glissmann wrote in a note dated Oct. 17.

While the options market is portending swings in the near-term for China-related assets, the volatility of the HSCEI Index is cheap versus that for the S&P 500 Index compared to history, they wrote.

Goldman’s preference for Chinese stocks over US peers comes after the former consistently featured among the world’s worst this year. Recession fears, exacerbated by Federal Reserve’s policy tightening, are at the heart of the carnage in global equities. Meanwhile, Chinese assets were also pressured by Covid-induced lockdowns, a property crisis and rekindling of US-China tensions.

The HSCEI Index has dropped 31% this year compared to a 23% fall in the S&P 500 Index. But Goldman raised caution over US equities last month arguing higher interest rates will weigh on valuations for stocks stateside.....

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We clipped that nonsense six days ago. Today, October 24, 2022:

In addition the S&P you sold calls on is up 1.7% in those six days.

This has to be deliberate, no one is accidentally that wrong.

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