By Mark Wilson, Goldman Partner and Managing Director
Post last weekend’s US-China tariff détente, Nasdaq’s up a cool 7% on the week, and S&P’s up over 5%; with that move came a painful unwind of recent ‘momentum’ in equity markets – Monday marked the 3rd worst day for momentum as a factor in the last 12mths. The awkward truth, given quite how dark sentiment got in the wake of “Liberation Day”, is that equities are uniformly higher than April 2nd levels, and major indices are uniformly up on the year – and many meaningfully so (DAX +20% now YTD … almost as unimaginable as the commitment made this week to get to 5% of GDP military spend ). Nasdaq (-75bps YTD) and Nikkei (-5% ) are the outliers, but with Mag-7 Q1 EPS growth coming in at 30% yoy again & fresh geopolitical impetus to the AI-theme post Trump’s Middle East travels, its difficult to bet against Nasdaq closing that performance gap
We made wholesale changes to our macro forecasts this week, for good reason as the left tail continues to shrink as tariff policy landing zones become narrower and less concerning than they were just a month ago. Alongside those more favorable macro forecasts, our earnings estimates & equity outlooks were similarly improved – this short note does a great job outlining forecast changes & key market views :: “What to do after the rally ?” . For the really short version:
