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Under the radar: Some trends are obvious enough and visible to all investors. Others are more-subtle, but are just as potent, and these often slip 'under the radar.'Case in point: One wonders how this research slipped under the radar, but it to-date hasn't received a great deal of attention from the popular press -- Goldman Sachs now expects the global economy to expand 4.4% in 2010, and 4.5% in 2011, as the world recovers from the financial crisis, Bloomberg News reported.
That contrasts with the International Monetary Fund's most recent forecast for 3.1% growth in 2010, following a -1.1% contraction in 2008.
"Our projections suggest that both 2010 and 2011 will be rather strong years," a team led by Jim O'Neill, Goldman Sachs's chief economist in London, wrote Tuesday in a report in which the bank made eight "top trade" recommendations, Bloomberg News reported. "The combination of better-than-expected growth and lower-than-expected inflation should be good news for financial markets." Among its recommendations, Goldman favors buying the British pound vs. the New Zealand dollar, and also favors Russian equities.
Economic Analysis: Goldman also listed a premature interest rate hike by the U.S. Federal Reserve among the risks to its forecasts.
Is Goldman on-the-mark? Goldman's 4.4% 2010 global growth forecast is a leap from the IMF's 3.1%, but if credit markets continue to stabilize, and China/India's economic recoveries accelerate, one would have two supports in place. The two wild cards? Will U.S. business investment rebound and will the price of oil moderate from its current $70-80 lofty level. As of now, the latter two are open questions, hence Goldman's projection has to be viewed as a decidedly-optimistic scenario.
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