They expect our GDP growth will slow to 2-2.5% through the end of 2012 but still expect the S&P to reach 1400 by year-end, which would require one raging bull very quickly.  They believe the stock market has already priced-in a recession, that has only a 1 in 3 chance of happening.  At the same time, they see no change in unemployment for at least a year.

Their 12-month target for gold is $1,860.  That means it has already peaked.

Most interesting, they expect the Fed to resume quantitative easing.  The relatively blissful attitude of the stock market this week is sweet anticipation of Bernanke’s speech in Jackson Hole this Friday, when “something” is expected.  I’m afraid the market will over-react, as it tends to do, when Bernanke does not roll out anything new.

The Fed tries to preclude the nastiness of our political children and will, unfortunately, be somewhat timid for now.  Still, Bernanke has traditionally used his annual Jackson Hole speech to make some new announcement.  If he does roll out something new, it will certainly not be called quantitative easing.  I think it is more likely he will list some of his remaining options, hoping to provide the market with some comfort that he is not out of bullets.

Learning yesterday that the CEO of Goldman Sachs hired a high-powered defense lawyer for himself  reinforced my belief that only their research department deserves my respect.