In a note to clients making the rounds on trading floors this morning, Goldman Sachs hinted that the peak in the U.S. business cycle may be nearing, meaning its time for investors to reallocate to more defensive sectors and single stocks with big international sales. They cited the slowing rate of growth in the manufacturing economy by the Institute for Supply Management.
“The ISM has posted four straight months above 60 and its highest level since 1983,” wrote David Kostin, Goldman’s portfolio strategist. “However, the rate of acceleration has slowed to neutral relative to last year.”
“Once the ISM peak has been reached and the rate of expansion is moving back towards neutral, historical performance supports more defensive positioning,” added Kostin.