Weekend Thoughts. 周末随想 2/53. Happy new year. 2/53. 新年快乐。 It felt rather weird to type 'Happy new year and welcome back' when so much happened in just a few trading sessions. 当短短⼏个交易⽇内发⽣如此多变化时，打出「新年快乐，欢迎回来」的感觉颇为奇怪。 Global equities at ATHs, US Momentum Long (GSCBHMOM) +15% YTD, Pre-Profit Tech +12% YTD, Memes stocks +5% on the week, CSI1000 up for 7 sessions straight, KOSPI +9% YTD after last year's +76% spike, Gold still climbing, credit spreads a narrowing, you get the drift. 全球股市创下历史新⾼，美国动量多头指数年内上涨 15%，预盈利 ...

January 9, 2026 | Ben Snider | Goldman Sachs & Co. | 1.212.357.1744 | ben.snider@gs.com | | --- | --- | --- | --- | | Ryan Hammond | Goldman Sachs & Co. | 1.212.902.5625 | ryan.hammond@gs.com | Investors should consider this report as only a single factor in making their investment decision. For Reg AC certification and other important disclosures, go to https://research.gs.com and www.gs.com/research/hedge.html c45a43530f604d12bcb9a82b5aa6b9f6 Earnings growth is the primary driver of equity returns US Equi ...

Give me a final trade while I have you real quick, please. >> Oh boy. Okay, I'll give you Milrose Properties, which leads into Steph's housing plate.9% yield. Excellent company. >> Josh, final.>> Exon Mobile breaking out. >> Steph, >> I like the India ETF. INDA, >> Nvidia, Broadcom, all of them going higher.>> Okay, so I'll see at three. We got Adam Parker, Edard Denny, Cameron Dawson, Brent Talkington, Kevin Simpson's got some new moves, too. And we'll certainly game out 2026.I'll see you in a couple hours ...

Market Trends & Growth Opportunities - Wedbush believes investors are underestimating Microsoft and Azure growth, with use cases exploding [1] - The last month has seen 2,530% of deals accelerated [1] - Hyperscaler investors are giving it no respect [2] - Only 3% of US companies have gone down the AI path, indicating significant growth potential [3] - Tech stocks are expected to be up 2,025% in 2026 [4] - 2026 is expected to be the year of AI monetization [7] - The AI revolution is fueled by Nvidia, which is 4 to 5 years ahead of anyone else in the market [8][9] Valuation & Investment Strategy - Street numbers for Microsoft are underestimated by 15% to 20% for 2026 [4] - Nvidia at 25 times forward earnings is considered a bargain [8] - Sell-offs in Nvidia are seen as golden buying opportunities [10] - It is more of a stock pickers market, focusing on ultimate winners in software, semis, and infrastructure [11] AI & Technology - Demand for Nvidia chips is 12 to 1 compared to supply [3] - Palantir customers are seeing ROI way accelerated ahead of what they ever expected [6]

Summary of J.P. Morgan Global Equity Strategy Conference Call Industry and Company Overview - **Industry Focus**: Global Equities, particularly driven by the AI sector and its implications across various industries including Technology, Utilities, Banks, Health Care, and Logistics [2][20][23] - **Company**: J.P. Morgan Securities LLC, a leading investment bank providing insights on market strategies and equity outlooks [3][5] Core Insights and Arguments Global Equity Outlook - **Positive Sentiment**: Expectation of double-digit gains in global equities across Developed Markets (DM) and Emerging Markets (EM) due to robust earnings growth, lower interest rates, and declining policy headwinds [2][20] - **U.S. as Growth Engine**: The U.S. economy is anticipated to remain the world's growth engine, driven by an AI supercycle leading to record capital expenditures (capex) and rapid earnings expansion [2][20][23] - **AI Investment**: Corporates and governments are racing to invest in AI, motivated by productivity gains and the fear of obsolescence, creating a polarized K-shaped economy with distinct winners and losers [2][20][21] Earnings and Market Projections - **S&P 500 Price Target**: Projected price target of 7,500 by year-end 2026, with expected earnings growth of 13-15% for 2026 and 2027 [6][22][28] - **Earnings Growth**: Anticipated EPS of $315 for 2026 and $355 for 2027, surpassing consensus estimates [6][22][28] - **Market Concentration**: AI-related stocks are increasingly dominating the S&P 500, with the top 30 AI stocks accounting for 44% of the index's market cap [26][39] Regional Insights - **Eurozone**: Expected earnings growth of over 13% in 2026, supported by fiscal stimulus and improved credit conditions [6][20] - **Japan**: Anticipated benefits from corporate reforms and increased capital investment, with a focus on unlocking excess cash [6][20] - **Emerging Markets**: Positioned for robust performance due to lower interest rates, attractive valuations, and improvements in corporate governance [13][20] Important but Overlooked Content - **AI's Impact on Economy**: The AI sector is expected to exacerbate the K-shaped recovery, leading to increased market concentration and a "winner-takes-all" dynamic [20][26] - **Investor Sentiment**: Broad sentiment measures are likely to experience sharp swings, despite solid underlying trends and fundamentals [2][20] - **Sector Rotation**: A shift is expected from peripheral markets (Italy, Spain) to core markets (France) within the Eurozone, indicating potential investment opportunities [6][20] Sector and Style Recommendations - **Sector Preferences**: Favorable outlook on Technology, Utilities, and Defense sectors, while remaining cautious on Financials and Health Care [30][36] - **Style Views**: Continued dominance of Quality Growth and Momentum stocks, with sensitivity to monetary policy shifts [36][30] Conclusion - **Investment Strategy**: J.P. Morgan emphasizes a selective approach to investment, focusing on sectors and companies that are well-positioned to benefit from the ongoing AI supercycle and broader economic trends [20][30][36]

Investment Rating - The report indicates a positive outlook for the Chinese equity market, particularly aligned with the 15th Five-Year Plan (FYP) [3][40]. Core Insights - The 15th FYP emphasizes high-quality, secure, and balanced growth, with a focus on technology, innovation, and improving people's livelihoods as key priorities for 2026-2030 [1][12]. - Historical analysis shows that aligning investment strategies with the FYP can yield significant alpha, with a potential 13% annualized alpha if portfolios are aligned with policy trends [2][18]. - The report identifies a universe of 35 GICS3 Industries that are expected to benefit from policy support, representing a total market cap of US$13 trillion, which is 66% of the full universe [3][40]. Summary by Sections 1. Historical Performance and Policy Alignment - MSCI China and CSI300 have delivered 8-10% total return CAGR since the 10th FYP, trailing nominal GDP growth of 11% [2][18]. - The report highlights that specific sectors mentioned in the 14th FYP significantly outperformed the benchmark, with average returns of 41% compared to -3% for the CSI300 [24][25]. 2. 15th FYP Portfolio Construction - The report screens for 50 mid-cap stocks across 21 sub-sectors, which have returned 68% in the past year, outperforming MSCI China by 33 percentage points [4][54]. - These stocks are expected to deliver a 30% EPS CAGR over the next two years, compared to 15% for MSCI China, indicating strong growth potential [4][54]. 3. Key Themes and Investment Opportunities - The report identifies several investment themes, including the return of private-owned enterprises (POEs), Going Global, AI, Anti-Involution, and Shareholder Returns, which are expected to outperform in a slower market [3][40]. - Emerging technologies such as 6G, bio-manufacturing, and hydrogen/nuclear fusion are highlighted as new areas of focus in the 15th FYP [12][15]. 4. Sectoral Analysis - The selected industries predominantly reside in Technology, Consumer, and Materials sectors, with a strong emphasis on tech-related industries expected to receive policy support [40][41]. - The report notes that the 15th FYP universe is expected to grow faster than the broader market, with higher profitability and growth capex intensity [40][39].

Core Viewpoint - The market is expected to shift focus towards earnings growth in 2026, particularly in the small and midcap sectors, which are projected to experience a recovery from previous earnings recessions [2][3][5]. Small and Midcap Sector - Small and midcap companies are anticipated to see earnings growth improve from low single-digit this year to low double-digit next year, driven by a recovery from two years of declining earnings [3][5]. - Companies in the small and midcap space that have raised their Q4 and 2026 guidance during the Q3 reporting period have outperformed the S&P 500 [3]. - The economic sensitivity of small and midcap stocks is expected to provide a favorable setup as macroeconomic conditions stabilize and potential Fed rate cuts occur [6]. AI Sector Dynamics - The AI sector is characterized by persistent spending dynamics, with capital expenditure improvements expected through the end of the decade [7][8]. - Ongoing volatility is anticipated as companies navigate the pace and justification of their AI-related spending [8]. - There is a focus on stock selection within the AI space, with an emphasis on semiconductors and software, while communication services have been adjusted to a market weight [10]. Broader Market Implications - Companies not directly associated with AI are beginning to implement AI processes, which could lead to higher productivity, improved margins, and reduced earnings volatility in the long term [11].

Market Sentiment - There is cautious optimism in the markets despite recent volatility, with a notable battle between consumer spending and sentiment [2][4] - Strong equity markets are being driven by reasonable earnings and good job numbers, indicating a shift from caution to more aggressive market behavior [3][5] Economic Indicators - Concerns exist regarding consumer spending during the holiday season, which is critical as it constitutes roughly two-thirds of GDP [4] - The S&P 500 has recovered from previous losses, indicating a psychological wobble rather than a fundamental market issue [5][6] Sector Performance - The market is currently influenced by a K-shaped economy, where asset price levels and corporate prosperity are sustaining market performance [5] - Technology, particularly driven by AI, is a significant factor in market dynamics, with companies continuing to invest in this sector [7][8]

Investment Rating - The report does not explicitly provide an overall investment rating for the sectors discussed [2]. Core Insights - The technology sector experienced a positive month with the NDX closing near all-time highs, driven by AI-related themes and significant partnerships [3]. - Financials faced bearish narratives, particularly concerning regional bank credit and consumer credit, impacting investor sentiment [3]. - The healthcare sector saw improved sentiment due to drug pricing agreements and increased M&A activity, although some biopharma stocks reverted initial gains [3]. - Consumer sentiment has turned cautious, particularly in restaurants and grocery sectors, indicating potential slowdowns [3]. - Industrial stocks showed mixed performance, with data centers and AI-related companies gaining traction while materials underperformed [3]. - Energy sector discussions centered around negative oil views, with potential for volatility and price upside due to geopolitical factors [3]. - Utilities are focusing on EPS guidance updates, particularly related to data centers and power demand growth [3]. - Special situations saw increased M&A activity, with notable deals and strategic sponsor involvement [3]. Sector Summaries Technology - The sector saw a +5% increase in October, with AI themes driving performance [3]. - Key subsectors included Semiconductors (+11%) and Software, which remained flat [3]. Financials - The sector faced challenges with narratives around credit quality and consumer spending [3]. - Notable upcoming earnings reports from private credit firms are expected to provide insights [3]. Healthcare - The sector experienced a boost from drug pricing agreements and M&A activity, although some stocks faced volatility [3]. - Biotech sentiment improved following significant policy changes [8]. Consumer - Sentiment has shifted to a more guarded stance, particularly in restaurants and grocery sectors, indicating potential slowdowns [10]. - Upcoming earnings from major retailers will be critical to assess the impact of economic conditions [10]. Industrials - The sector showed modest gains, with data centers and AI-related stocks performing well [3]. - Concerns about inflation and earnings downgrades were noted in the materials subsector [3]. Energy - Investor sentiment remains cautious, with discussions around oil price volatility and geopolitical developments [3]. - The refining sector is experiencing mixed conversations regarding future expectations [3]. Utilities - Focus on EPS guidance updates and potential growth in power demand [3]. - M&A activity is expected to increase, with significant deals in the pipeline [3]. Special Situations - M&A activity surged in October, with notable deals and strategic sponsor involvement [3]. - The report highlights ongoing debates around valuations and potential acquisition targets [19].

Summary of Key Points from the Conference Call Industry Overview - The conference call primarily discusses the **Chinese economy** and its macroeconomic indicators, particularly focusing on the **manufacturing sector** and **capital markets** in China. Core Insights and Arguments - **Trade Relations**: Following the meeting between President Xi and President Trump on October 30, the US announced a **10% reduction in fentanyl-related tariffs** on China and a partial loosening of export controls. In return, China agreed to postpone its rare earth controls for one year and resume soybean purchases [1][1][1]. - **GDP Growth Forecasts**: Economists have revised the **2025 real GDP growth forecast** for China to **5.0%** (up from **4.9%**), with **2026/27 forecasts** also increased to **4.8%** and **4.7%** respectively, driven by stronger export growth and government spending [1][1][1]. - **Market Performance**: The MXCN and CSI300 indices experienced losses of **1.5%** and **0.4%** respectively. However, there were **US$3.5 billion inflows** into the Southbound Connect this week, indicating continued interest in Chinese equities [1][1][1]. - **Industrial Profit and Revenue**: In September, industrial profit increased by **23.0%** year-over-year, while revenue rose by **3.3%** year-over-year [1][1][1]. - **PMI Indicators**: The NBS manufacturing PMI decreased to **49.0**, indicating contraction, while the non-manufacturing PMI slightly improved to **50.1** in October [1][1][1]. Additional Important Insights - **Capital Market Focus**: The CSRC Chair highlighted six key areas for capital markets under the **15th Five-Year Plan**, emphasizing the government's commitment to enhancing market conditions [1][1][1]. - **Loan Demand and Business Conditions**: The People's Bank of China (PBoC) Q3 surveys suggest marginally better loan demand and improved business conditions, indicating a potential recovery in the financial sector [4][4][4]. - **Sector Performance**: The **Materials** sector outperformed with a **3.1%** increase, while the **Real Estate** sector lagged with a **-1.5%** decline [3][3][3]. - **Earnings Growth Projections**: The consensus for **2025/26 EPS growth** is projected at **1%/16%** for MXCN and **15%/13%** for CSI300, with the **Materials** sector seeing the most significant upward revision [10][10][10]. Conclusion The conference call provided a comprehensive overview of the current state of the Chinese economy, highlighting the impact of trade relations, GDP growth forecasts, and sector performance. The insights suggest a cautiously optimistic outlook for the Chinese market, driven by government policies and improving economic indicators.