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According to Goldman Strategists, the U.S. economy is a safer bet than “dark” Europe.

According to Goldman Strategists, the U.S. economy is a safer bet than “dark” Europe.

According to Goldman Sachs Group Inc. strategists, U.S. companies that do the majority of their business domestically will perform better than those exposed to Europe, where a recession is virtually assured.

The Goldman Sachs team lead by David Kostin asserts that while the course of US economic development is “uncertain,” the situation in Europe is catastrophic.

“Despite investor concerns about the US equities market, we believe it offers more absolute and risk-adjusted return potential than Europe’s markets,” they wrote.

Goldman’s preference for US exposure comes amidst what is shaping up to be a very difficult year for European business due to a gas crisis, skyrocketing prices, and tightening monetary policy. In terms of dollars, the Stoxx Europe 600 has lagged behind the S&P 500 this year, and a Goldman basket of US firms with 100% domestic sales has outpaced a basket tracking those with significant European sales.

The strategy is one of four identified by Kostin’s team to drive equities performance until the end of the year. The others include firms with high quality fundamentals, so-called value shares, and large dividend payers.

“Investors concerned about economic contraction should own dividends through futures contracts or individual stocks,” advised the strategists. “Dividends provide investors with exposure to S&P 500 underlying growth while mitigating stock valuation risk.”

Kostin and his colleagues favor high-quality firms with excellent balance sheets and consistent revenue and earnings growth. They anticipate that the S&P 500 will end 2022 at 4,300 points, or 5.7% above Friday’s level, assuming that Federal Reserve tightening leads to a continuation of the US economic growth slowdown.

Barclays Plc strategists, including Matthew Joyce, became overweight on value stocks in Europe on Monday, citing the fact that higher rates for a longer period of time have not yet been reflected in value and growth.