The stock market hit all-time highs last week, but a Goldman Sachs executive warns that the new momentum could see some bumps in the road.
In a new interview with Goldman partner Bobby Mulavey Analytics Whether traders should fade or chase last week’s rally.
“I think it’s still hard to imagine or believe that the market has been very resilient, given the different things we can worry about. You know what? Oil is back to where it was in 1992. But it’s not back to where it was before the crisis. Obviously interest rates now have normalized a little bit. But the rise versus cut dynamic will likely lead to slower or later cuts than people had hoped.”
So, I think he’s in a delicate position. I think the market is still attaching itself to the AI capex story. You mentioned some of those tailwinds, particularly financial, when it comes to Europe. Some of these types of topics are second-order, for example, AI capex and AI disruption. And some valuable suggestions on efficiency and productivity from that. But I think we’ve come a long way. We are essentially pricing the conflict to be resolved at 5. I think there is still some marginal risk of disruption along the way. So, stop the rise, if you have to choose.”
Molloy also notes that he focuses on “asset heavy, low obsolescence” (aura) theme, which includes investing in assets that are resilient to disruptions caused by artificial intelligence.
“I think in areas where it’s impossible to pinpoint or precisely quantify the ultimate value of a product, it’s going to be really difficult to know where a particular stock should trade in terms of multiples or trajectory. But I think scarcity is being redefined. We realize that there are a bunch of things that the world needs. Oil is just one example. Solids, heavy commodities are the other ones, which have been undervalued over the last few years. And what kind of value those commodities have in terms of supply chains and companies. The key component parts of things like chip manufacturing have been proven more recently, and I think that’s a theme that will continue.
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