As the S&P 500 nears a third year of double-digit gains, Goldman Sachs macro trader Bobby Molavi has likened the stock market’s setup heading into the new year to a boxing match. Bullish factors such as artificial intelligence advancements and potential stimulus measures are set to confront bearish forces, including stretched valuations and increasing credit stress.
Molavi estimates that approximately $US600 billion ($900 billion) in capital spending from the ‘Magnificent Seven’ tech companies is flowing into the US economy. Furthermore, potential income tax cuts and $US2000 stimulus cheques are adding to the bullish sentiment. Molavi highlighted numerous factors supporting the bull’s perspective.
In a note to clients, he noted the end of quantitative tightening (QT), continued US deficit spending, and $US1.2 trillion in buyback authorisations slated for 2026. Additionally, ongoing retail investment and ‘buying the dip’ behaviour, coupled with potential bank deregulation and capital easing in 2026, further bolster the bullish outlook.
