Exclusive: Goldman Sachs survey finds investors expect long trade war

Wall Street is hunkering down for a longer, more intense trade war, according to Goldman Sachs' monthly poll of more than 1,000 of the bank’s institutional and corporate trading clients, which found that most expect tariffs to hold steady as talks continue.

The backdrop: The survey, which gauges the sentiment of sophisticated investors about market-related topics, was conducted on Aug. 1-2, as President Trump said he would tax the remaining $300 billion worth of Chinese imports next month.

• Details: 61% of respondents said they expected negotiations to continue with “steady tariffs“ — down from 74% in July.
• 17% said they expected tariffs to increase, and 15% said they expected an escalation in tensions with non-tariff measures. Those numbers were up from 6% and 8%, respectively.
• Only 5% – down from 9% in July – said they expected that a deal, with all tariffs removed, would happen before year-end.

What else they're saying: When asked which event they're most focused on in August, the top answer, with 27% of respondents, was "Brexit developments." #2 was "Fed minutes."

• Asked what they scenario they anticipated for Brexit on Nov. 1, the plurality of respondents (33%) said "no-deal Brexit with negotiated mitigations."

Respondents were gloomier than they were in July about how the stock market would end the year.

• 38% said the S&P 500 would end the year lower vs. the 28% who said so in July.
• Only 19% predicted the market would end slightly higher, down from 26% last month.
• The respondents, 39% of whom said they expected to keep their market positions stable in August, had the dimmest view of risky assets since 2016, with 37% saying they were "slightly bearish" on them.