The wind behind the bear market summer rally was driven by a belief by many that the Federal Reserve was getting close to a pivot on rate policy. Breathless analysts looking at any tiny drop in the inflation data were sure it was a possibility. All that ended when Fed Chair Powell gave the pivot possibilities a knockout punch at the Jackson Hole economic symposium in late August. He basically said higher rates are coming for longer.
The economic team at Goldman Sachs has surveyed the data and listened to the hawkish commentary coming from Powell and other Fed governors, and the firm is moving its estimates on the upcoming interest rate hikes higher. Goldman Sachs now thinks that the September increase again will be by 75 basis points. That is up from the previous estimate of 50 basis points. In addition, the firm is raising its November increase to 50 basis points from 25 basis points.
We have cautioned about fighting the Fed, whether it is raising or lowering rates. These increases and the ensuing economic downturn that may be inevitable could possibly drive the S&P 500 to 3,400 or lower. The venerable index closed Thursday at 4,006. Bear market rallies like the one this summer can be helpful as investors get the opportunity to sell after big upward moves in the market, and then replace volatile stocks with more conservative dividend plays when stocks trade lower.
We screened the Goldman Sachs Conviction List looking for safe dividend ideas investors can rotate to now to get ahead of what could be a big move lower in the fall. All seven of the chosen stocks are among the top stock ideas from one of the world’s biggest and most successful investment banks. However, it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Cheniere Energy
This top liquefied natural gas (LNG) play has made a huge move off the October 2020 lows. Cheniere Energy Inc. (NYSEAMERICAN: LNG) is an energy company primarily engaged in LNGelated businesses. The company operates through two segments.
Cheniere’s LNG terminal segment consists of the Sabine Pass and Corpus Christi LNG terminals. Its LNG and natural gas marketing segment consists of LNG and natural gas marketing activities by Cheniere Marketing.
Cheniere Marketing is developing a portfolio of long- and medium-term sale and purchase agreements with professional staff based in the United States, the United Kingdom, Singapore, and Chile. The company conducts its business through its subsidiaries, including the development, construction, and operation of its LNG terminal business and the development and operation of its LNG and natural gas marketing business.
Investors receive a 0.80% dividend. Goldman Sachs has a $182 price target on Cheniere Energy stock. The consensus target is $172, and shares closed on Thursday at $159.18.
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