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Goldman Sachs: There are no cheap stocks 'anywhere' in the market

  • "There's no value anywhere in the market. Everything trades at high levels," says Goldman strategist David Kostin.
  • The earnings side of the price-earnings ratio becomes key as third-quarter results start to pour in, he says.
  • "The market has not embedded a full expectation of tax reform," he estimates.

With the stock market hitting record highs again early Tuesday, investors will be hard-pressed to find bargains, said the chief U.S. equity strategist at Goldman Sachs.

"There's no value anywhere in the market. Everything trades at high levels. And everything trades in a well-ordered fashion," David Kostin told CNBC's "Squawk on the Street."

In the absence of cheap stocks, the earnings side of the price-earnings ratio becomes key as third-quarter results start to pour in over the next few weeks, he contends.

Kostin expects technology stocks to deliver about 11 percent earnings growth for the July-to-September period compared with roughly half that for the rest of the market.

Handicapping another big factor for Wall Street, Kostin said, "The market has not embedded a full expectation of tax reform." He argued it's trading "around 60 percent of the way there."

"If you had tax reform, that could add $8 a share to earnings. That would put you close to 2,600" on the S&P 500, he said.

The index, which closed modestly lower on Monday at 2,544, touched a new intraday high above 2,555 in early trading Tuesday.

"The basic issue is there are very few opportunities in the market," Kostin said, contending margins and taxes are the "two principle debates with portfolio managers."

WATCH: Full interview with David Kostin of Goldman Sachs

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