Tech is going to continue to drive the market rally, says HSBC’s Jose Rasco

Market Concentration & Earnings - Market cap concentration is unprecedented, but those stocks aren't contributing a record amount of S&P earnings [3] - The "Magnificent 7" (Mag 7) have largely driven market returns since April [7] - Earnings for the "forgotten 493" are expected to almost quadruple [7] - Growth value has a 4x multiple, which is unsustainable [7] - The Mag 7 versus the forgotten 493 has been a 4x multiple in the last three months [7] Valuation & Diversification - Valuation eventually matters [5] - Owning the rest of the market has historically been the right move during periods of high concentration [4] - Diversification is crucial [7] Catalysts & Potential Upsides - Takeovers of smaller companies by private equity or larger corporations could be a catalyst [10] - Productivity gains from technology, including AI, are expected to broaden and impact earnings across various sectors like financials, education, and hospitals [8][12] - Tariffs may not be as severe as initially anticipated, presenting a potential upside surprise [13] - Anticipated moves by the Federal Reserve (Fed) in September, December, and March could be accretive to earnings [13]