Goldman Sachs on Increased Interest in Public Markets and US Equity Outlook

Family Office Interest in Public Markets

• 🎯 A recent meeting with 200 institutional family offices from 17 countries revealed a greater interest in public markets.
• 💡 This increased engagement is attributed to the market dislocation observed on April 2nd, making clients more involved.

Bullish Case for US Equities

• 📈 Despite policy and political uncertainty, a bull case for US equities remains strong, particularly for the US market.
• ⚠️ While the VIX has risen, indicating a need for hedging strategies, the underlying sentiment for US equities is positive.

Performance of US Equities

• 📊 The market has seen a broadening of performance, with the '493' stocks (smaller companies) outperforming the 'Mag 7' year-to-date (nearly 5% vs. 2%).
• 🚀 However, the 'Mag 7' stocks are still favored due to their strong first-quarter performance and their position at the beginning of an AI innovation cycle.

AI Revolution and Market Dynamics

• ⚡ The AI revolution is seen as being in its early stages, suggesting continued support for AI-related stocks.
• 💰 There's a discussion about the potential for a reversion to smaller stocks leading, but the speaker advises against betting against the 'Mag 7' due to their significant earnings growth (28% vs. 8% for the rest of the market).
• 📈 Mutual funds being underweight in these stocks presents a potential tailwind.

Market Activity and Long-Term Investing

• 🔑 The idea that the bullish case for the year was merely delayed, not denied, is supported by recent capital markets activity, including 10 successful IPOs in the past month.
• ✅ The long-term perspective is emphasized, with clients generally looking to own stocks for years and across cycles.
• ⚠️ Potential negative factors include a surprise around effective tariff rates and geopolitical risks, but barring these, the outlook is positive for long-term investors.
• 🧠 Clients are aware of risks like inflation and potential labor market unraveling but are generally not complacent, preferring to manage risk through hedging rather than exiting positions.