Investment Rating - The report maintains a positive outlook on the MedTech sector, reiterating Buy ratings on several companies including Boston Scientific (BSX), Edwards Lifesciences (EW), and Intuitive Surgical (ISRG) [6][10]. Core Insights - The MedTech industry is experiencing strong operating fundamentals with organic sales growth averaging 6.7% in Q1 2025, an acceleration from 7.2% in Q4 2024 [3][22]. - Profitability has improved across the sector, although there are expectations of greater pressure on margins due to macroeconomic challenges and tariffs [3][25]. - The report highlights a widening gap in valuation and top-line growth among companies, with Boston Scientific's NTM P/E multiple expanding from 64% to 123% since December 2022 [5][6]. Summary by Sections Market Overview - The report discusses various events and management meetings that have shaped the outlook for the MedTech sector, including investor trips and conferences [3]. - It notes that the policy environment appears favorable for MedTech, with potential tariff relief and tax reform benefits [6]. Company Performance - Organic sales growth varied across companies, with those in high-growth categories like Robotics and Diabetes showing strength, while others faced challenges due to exposure to China and macroeconomic headwinds [3][18]. - Six companies have raised their full-year 2025 guidance, indicating a more balanced outlook for the second half of the year [22]. Financial Metrics - The report indicates that the average gross margin for large-cap MedTech companies was 60.2% in Q1 2025, reflecting a year-over-year increase [25]. - Operating margins expanded by 120 basis points year-over-year, supported by moderating inflation and favorable product mix [25][29]. Growth Projections - The report anticipates that organic growth will be driven by product cycles and innovation, with demographic factors and hospital financial conditions remaining healthy [18][40]. - Companies like Abbott and Boston Scientific are expected to sustain organic growth rates of at least 10% through 2027, despite some deceleration anticipated in the near term [9][10]. Tariff Implications - The report discusses the potential impacts of tariffs, particularly related to China, and suggests that tariff relief could provide upside to earnings forecasts [31][32]. - It highlights that the anticipated impacts from tariffs remain dynamic, with expectations of lower rates potentially benefiting companies like GE Healthcare [31][32].

Investment Rating - The report maintains a BUY rating for MongoDB (MDB) and Accenture (ACN) based on their growth potential and market positioning [9][12][13]. Core Insights - MongoDB has shown a re-acceleration in its Atlas business, with a 17% pre-market increase following a 25% raise in full-year operating income expectations, although still below previous quarter levels [5][8]. - Investor sentiment around MongoDB has declined in recent quarters, with ongoing debates about its ability to transition to a Generative AI stack [6][9]. - Accenture faces bearish sentiment ahead of its earnings report, with short interest rising significantly, but bulls point to a supportive backlog and favorable valuation metrics [12][13]. Summary by Sections MongoDB (MDB) - MDB's stock has seen a 17% increase in pre-market trading due to positive expectations around its Atlas business, marking the first re-acceleration in years [5]. - The company is experiencing mixed execution and a debate on its positioning in an AI-first world, with discussions focusing on its transition from Cloud/Mobile to Generative AI [6][9]. - The report highlights a significant uptick in customer net additions, marking the largest quarter-over-quarter gain in six years, indicating positive momentum [7][8]. Accenture (ACN) - Accenture is under scrutiny with increased short interest, reflecting concerns over macroeconomic factors and competition in the AI space [12]. - The report anticipates that if Accenture reports better-than-expected revenue results, it could stabilize its stock price [13]. - Key focus areas for Accenture include guidance for Q4 FY25, bookings growth, and the impact of government IT spending on its revenue [15].

Investment Rating - The report does not explicitly provide an investment rating for the industry discussed [3]. Core Insights - The global real GDP growth is expected to slow to 2.4% year-on-year in 2025, influenced by higher US tariffs and trade policy uncertainty [4][5]. - In the US, real GDP growth is projected to be 1.0% in 2025, with a 35% probability of entering a recession within the next 12 months [4]. - The Euro area is anticipated to see a real GDP growth of 0.9% year-on-year in 2025, affected by elevated trade policy uncertainty [4]. - China is expected to achieve a real GDP growth of 4.6% year-on-year in 2025, despite ongoing challenges in the property market [5]. Economic Forecasts - The LME aluminum price forecast for 2025 has been raised to $2,400 per metric ton, while the 2026 forecast has been lowered to $2,230 per metric ton [1]. - Core inflation in the US is expected to rise to 3.6% year-on-year by the end of 2025, driven by higher tariffs [4]. - The unemployment rate in the US is projected to increase to 4.5% by the end of 2025 [4]. - The European Central Bank (ECB) is expected to implement a series of rate cuts, reaching a policy rate of 1.75% by July 2025 [4]. Regional Insights - In the US, consumer spending and business investment are anticipated to be negatively impacted by elevated policy uncertainty and rising tariffs [4]. - The Euro area is expected to experience a cooling in services inflation, contributing to a decline in core inflation to 2.1% by the end of 2025 [4]. - In China, inflation is projected to remain very low, with CPI inflation expected to end the year at 0% and PPI inflation at -2.1% [5].

Investment Rating - The report indicates a negative impact on European equities due to Section 899, with an estimated decline of 1-2% in the first year and up to 5% over a four-year horizon [10] Core Insights - Section 899 introduces retaliatory tax measures against non-US individuals and entities from countries imposing "unfair foreign taxes" on US persons, which could discourage foreign investment in US assets [2][8] - The withholding tax for listed companies will start at 5% and increase by 5 percentage points annually to a maximum of 20%, affecting both active business income and passive income [3] - European equities, particularly those with significant US operations, are notably exposed, with the STOXX 600 deriving approximately 25% of its revenues from the US [10] - The report suggests that Section 899 may catalyze renewed interest in European equities as international investors may reduce their appetite for US assets [19] Summary by Sections Tax Mechanics - The withholding tax will apply to both active business income and passive income, starting at 5% and increasing annually [3] Affected Entities - Non-US individuals and entities in countries with UTPRs, DSTs, or DPTs will be affected, including foreign governments, sovereign wealth funds, and foreign corporations [4] Impact on European Equities - Earnings for the STOXX 600 could be revised down by 1-2% in the first year and by as much as 5% over four years, translating to a potential decline in European equities [10] - Companies with high US exposure have begun to reflect growing investor concerns, with a specific subset (GSXES899) particularly vulnerable to Section 899 [13] Investment Strategy - The report recommends focusing on quality domestic exposures in Europe, highlighting sectors such as Banks, Retail, and Telecoms for overweight positions [14]

Investment Rating - The report indicates a modest net change in the fiscal balance due to the reconciliation package, with an estimated $275 billion addition to the deficit next year, suggesting a cautious investment outlook [3][4]. Core Insights - The reconciliation bill, titled the "One Big Beautiful Bill Act," is expected to create a fiscal expansion of roughly $4 trillion relative to current law, but the net impact on corporate earnings is estimated to be about 5% for S&P 500 in 2026, diminishing in subsequent years [3][4]. - The corporate provisions in the bill will primarily shift the timing of tax payments rather than permanently lower tax rates, impacting cash flows more than GAAP net income [4][9]. - The potential changes to business expensing will significantly affect capex-intensive companies and those with high interest expenses, particularly in the small-cap sector [9][32]. Summary by Sections Fiscal Policy Impact - The reconciliation package is expected to have a modest direct impact on S&P 500 earnings and cash flows, with a collective effect of approximately 5% on earnings in 2026 [4][5]. - The bill's provisions, including capex and R&D expensing, interest deductibility, and foreign income treatment, will contribute to GDP growth, further lifting S&P 500 earnings by about 1% [4][31]. Market Reactions - Few sectors have shown a strong correlation with fiscal policy expectations, although renewable energy stocks have reacted to legislative developments [2][20]. - The report highlights that stocks with elevated interest expenses and low effective tax rates may face scrutiny as Congress negotiates the legislative package [30][43]. Sector-Specific Insights - The legislation's impact on interest deductibility will have a larger effect on small-cap stocks compared to large-cap stocks, with 34% of Russell 2000 companies having interest expenses exceeding 30% of EBIT [9][14]. - Consumer-facing stocks may benefit from the fiscal package, with expected boosts to consumer spending adding about 0.3 percentage points to GDP growth in 2026 [31][32]. Valuation Considerations - The reconciliation bill could influence equity valuations if it leads to upward pressure on interest rates, with historical data indicating stocks typically react poorly to rapid increases in yields [34][42]. - A potential increase in the 10-year Treasury yield toward 5% could catalyze additional equity volatility, impacting investor sentiment [34][38].

Investment Rating - The report maintains a "Buy" rating for integrated players such as SF Holding, JD Logistics (JDL), and the leader ZTO, while adopting a "Neutral" rating for others like STO, Yunda, and J&T, and a "Sell" rating for YTO and Sinotrans-A/H [7][21]. Core Insights - The express delivery sector in China is experiencing intense price competition, leading to a decline in average selling prices (ASPs) and profitability across franchise-based players, while integrated logistics providers show resilience [1][21]. - The report revises the expected industry volume growth for 2025E from 18% to 20% year-on-year, driven by a shift towards lightweight and small parcels, and the growth of emerging eCommerce platforms [2][21]. - The report highlights that the competitive landscape will depend on strategic adjustments by incumbents and potential policy interventions to stabilize pricing [1][21]. Summary by Sections Industry Overview - The express delivery sector concluded 1Q25 with a 22% year-on-year volume growth but faced a 6-10% decline in ASPs across major players [21][22]. - The ongoing price competition is attributed to a trade-down trend in eCommerce goods and the need for express players to maintain capacity utilization [22][23]. Financial Performance - The report indicates that the group operating profit for Tongda players is expected to decline by approximately 12% year-on-year in 2025E, with SF being the only player projected to see double-digit profit growth [6][7]. - Adjusted net profit forecasts for franchise-based players are revised downwards by 9% to 19% below Bloomberg consensus [7][21]. Company-Specific Insights - SF Holding is noted for its strong performance, with a 20% year-on-year EBIT growth in 1Q25, benefiting from cost optimization and a diversified revenue stream [1][40]. - ZTO is highlighted as the only Buy-rated franchise-based express delivery name, expected to stabilize its market share despite near-term earnings weakness [7][21]. - Yunda and YTO are projected to experience low-to-mid teens year-on-year profit declines, while STO and J&T China are expected to see flat earnings [6][7]. Market Dynamics - The report anticipates continued competition in 2Q-3Q25, with potential for strategic adjustments or industry consolidation to mitigate pricing pressures [1][21]. - The ASP for express delivery services is forecasted to decline by 6% to 8% across major players in 2Q25E, reflecting a slightly easier base compared to 1Q [22][23]. Volume and Revenue Estimates - The report raises the industry volume estimate for 2025E to 20% year-on-year, factoring in strong growth momentum and a shift in parcel mix [2][21]. - Revenue estimates for ZTO are cut by 6% due to less-than-expected impacts from gross revenue bookings, while Yunda and YTO see slight revenue increases [2][6]. Valuation - The report continues to value China express delivery companies based on a 1-year forward EV/EBITDA multiple, which remains unchanged at an average of 7X [13][15].

Investment Rating - The report suggests a modest impact on corporate earnings and cash flows from the budget reconciliation bill, estimating a boost of around 5% for the S&P 500 in the next year [1][2]. Core Insights - The budget reconciliation bill is expected to have only a modest effect on the US fiscal balance and corporate earnings, with potential earnings boosts diminishing in subsequent years [1][2]. - The ECB is anticipated to cut rates by 25 basis points, with growth forecasts remaining unchanged at 0.9% for this year and a slight decline for next year [11]. - The report highlights the potential for renewed interest in European equities due to the Section 899 provision of the reconciliation bill, which may create uncertainty for US investments [2][5]. Fiscal Policy Focus - The budget reconciliation bill is projected to have limited effects on migration and economic activity, particularly for high-earning households [5]. - Fiscal policy in China is expected to support growth, with an estimated boost of 1.1 percentage points to real GDP growth this year [6]. ECB Projections - The ECB's growth forecast for this year is expected to remain at 0.9%, with a slight decline in next year's forecast [11]. - Inflation projections are likely to be downgraded, with headline and core inflation expected to decline to 1.7% and 1.8% respectively for next year [11]. US Jobs Report - The report estimates a below-consensus increase of 110,000 in nonfarm payrolls for May, with an unchanged unemployment rate of 4.2% [16]. - Average hourly earnings are forecasted to increase by 0.3% month-over-month [16]. Steel and Aluminum Tariffs - The doubling of US steel and aluminum tariffs to 50% is expected to negatively impact US steel demand from the manufacturing sector [16]. - There is a potential risk of tariffs being imposed on copper imports, which is currently underpriced in the market [16].

Investment Rating - The report highlights 44 Buy-rated stocks that are expected to benefit from the AI/data center power surge, including Quanta Services, GE Vernova, Xcel, Cameco, and NextEra [3][54][57] Core Insights - Strong demand and government actions are driving an average cost increase of 23% for new power generation capacity additions in the US, with a focus on reliability and affordability in power sourcing [1][12] - The Green Reliability Premium, which accounts for redundancy in power solutions, is projected to rise significantly if IRA renewables incentives are eliminated, impacting the overall cost structure for data centers [2][42] - The report anticipates a 160% increase in global data center power demand (AI + non-AI) by 2030 compared to 2023, equivalent to adding another top 10 power-consuming country [21][27] Summary by Sections Green Reliability Premium - The Green Reliability Premium is estimated to be $40/MWh with current IRA incentives, increasing to $55/MWh if these incentives are removed, representing a modest impact on hyperscaler EBITDA [42][44] - The report emphasizes that the cost of power is not seen as a constraint to data center growth, although regional power reliability and affordability will influence siting decisions [21][46] Power Demand and Supply - The US power demand is expected to grow at a CAGR of 2.5% through 2030, with data centers contributing approximately 100 basis points to this growth [22][24] - The report outlines diverse drivers of upward cost pressure across power generation, including tariffs and demand for natural gas, which could lead to significant increases in levelized costs [12][19] Investment Opportunities - The report identifies a bullish outlook for infrastructure contractors, regulated utilities, and industrials due to the rising demand for reliable power amid aging infrastructure and extreme weather events [3][54] - It highlights the importance of an all-of-the-above approach to power sourcing, considering the variability in supply availability and time to market [1][46]

Investment Rating - The report indicates a lowered forecast for nonfarm payroll growth to +110k, which is below the consensus of +126k, suggesting a cautious outlook for the employment sector [9]. Core Insights - Private sector employment increased by 37k in May, which was below expectations, and the previous month's employment was revised down to +60k from +62k [1][2]. - The ISM services index fell to 49.9 in May, indicating contraction, with significant declines in business activity and new orders, while the employment component showed a slight increase [3][7]. - The S&P Global US services PMI was revised up to 53.7, reflecting improvements in new business and employment components [7]. Summary by Sections Employment Data - The ADP report showed a 37k increase in private sector employment for May, with a notable rise in the services sector, particularly in leisure and hospitality (+38k) and financial services (+20k) [2][3]. - Employment in goods-producing industries saw a slight decline of 2k, despite a 6k increase in construction jobs [2]. ISM Services Index - The ISM services index decreased by 1.7 points to 49.9, falling short of consensus expectations, with declines in business activity (-3.7 points) and new orders (-5.9 points) [3][7]. - The employment component of the ISM services index increased by 1.7 points to 50.7, indicating a marginal improvement in employment conditions [3]. S&P Global Services PMI - The S&P Global US services PMI was revised up by 1.4 points to 53.7, with both new business and employment components showing positive revisions [7]. - The new business index increased by 0.9 points to 53.2, while the employment index rose by 2.4 points to 51.8, indicating a more favorable outlook for the services sector [7].

3 June 2025 | 9:27AM EDT US Monthly Inflation Monitor: May 2025: The Tariff Boost Remains Small for Now but Should Rise From Here (Rindels) Goldman Sachs & Co. LLC n Recent inflation trends: n Factors influencing core goods prices: Jan Hatzius +1(212)902-0394 | Goldman Sachs & Co. LLC Alec Phillips +1(202)637-3746 | Goldman Sachs & Co. LLC David Mericle +1(212)357-2619 | david.mericle@gs.com Goldman Sachs & Co. LLC Ronnie Walker +1(917)343-4543 | ronnie.walker@gs.com Goldman Sachs & Co. LLC Manuel Abecasis ...