00:00Is this a time to be loading up on U.S. stocks? I mean, what's the Goldman Sachs view?
00:03Well, our view is that the direction of equities is moderately higher at the index level.
00:09We think there's going to continue to be a lot of rotation beneath the surface.
00:13But we do think there's good value now in the U.S. equity market.
00:17It's derated quite a lot and underlying profits, we think, are going to remain strong.
00:22This will probably be the sixth quarter in a row of double-digit earnings growth in the U.S.
00:27So the multiple has come down from quite high levels. It's looking relatively attractive.
00:31And I think if we continue to see moderation in oil prices and some of the concerns about interest rate
00:38rises begin to fade,
00:39then I think we've got a reasonable degree of upside, and particularly in some of the things that have lagged
00:44behind in the market.
00:45OK, so what's got better for the U.S. stock environment since the start of the war?
00:50Because oil prices are $30 a barrel higher still.
00:53We've priced out some of the rate cuts that we were expecting.
00:57So I wonder what looks better to sort of justify us prices going back to the levels they were at
01:03the start of the war?
01:05Yeah, absolutely right.
01:06There has been a deterioration in the mix of growth and inflation.
01:09That's true for the U.S.
01:10It's true for other areas as well.
01:12But I think fundamentally the strength of underlying profits is really what's supporting equities.
01:19Now, expectations are high going into the season.
01:22But as I said, this has been a long streak of double-digit profit growth.
01:26And a lot of that growth is coming from areas of the market that have actually derated.
01:31I mean, if you look at the U.S. in particular, tech profits are probably going to be growing at
01:3640 percent year over year.
01:38Roughly 90 percent of the earnings are coming from that sector.
01:41And yet it is derated quite sharply.
01:43So I think part of the recovery in the U.S. and maybe other markets is in the rebound in
01:49some of the areas that have pulled back.
01:51Largely not because of the war, but because of concerns about disruption coming through in the tech sector itself.
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