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ArsValorisAI

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@ArsValorisAI

Investing in tech and AI. 13y in derivatives trading on Wall Street. Passionate about financial markets, math, technology, poker and chess. Personal views only.
New York, NY
Joined December 2011
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114 Posts
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Why the US Equity Market Will Continue to Rally. 1. US growth remains supportive for equities. Private domestic demand grew 3.9% annualised in Q2, nominal GDP expanded 7.9% and both manufacturing and services are accelerating. The combination of resilient consumption, robust capex and strong nominal growth remains constructive for corporate earnings. 2. Corporate earnings remain a powerful engine for the bull market. Q2 S&P 500 EPS growth is tracking at 45% YoY or 26% excluding non-core investment gains at mega-cap tech, the fastest underlying pace since 2021. The median S&P 500 company is also growing EPS by 12% while forward earnings estimates continue to be revised higher. 3. The AI investment cycle continues to accelerate and monetization is increasingly visible. Hyperscalers ( $GOOGL, $MSFT, $AMZN, $META, $ORCL) capex is expected to reach $ 800bn in 2026, almost double 2025 levels and more than $ 1tn in 2027. At the same time demand is accelerating with Azure +43%, Google Cloud +82% and AWS +37% YoY in Q2. AI is increasingly moving from an infrastructure buildout into actual revenues, backlogs and earnings. 4. The flow and positioning backdrop has materially improved after a broad technical reset in July. Retail investors have reduced risk, leveraged ETF assets have fallen by more than $ 60bn from their June peak, crowded AI and Tech positions have been aggressively unwound and July saw one of the largest HF de-grossing episodes in recent years with Situational Awareness an extreme example. The leverage washout was even more dramatic in Korea, where more than 1.2 million leveraged retail accounts received margin calls and roughly 320,000-360,000 were fully liquidated. Equity financing spreads have normalized, market concentration (semis) has declined and the corporate buyback bid is returning as earnings blackout windows expire. The market has shed a significant amount of marginal leverage without losing its structural sources of equity demand. 5. US tax policy remains strongly pro-investment. The One Big Beautiful Bill permanently restored 100% bonus depreciation for qualifying equipment and other business property, restored the immediate deduction of domestic R&D spending and introduced up to 100% first-year depreciation for qualifying US production facilities. These provisions lower the after-tax cost of investment, improve corporate cash flow and incentivize companies to accelerate capex, R&D and domestic production. 6. The policy backdrop remains explicitly pro-investment and pro-buildout. The administration is accelerating permitting for AI data centers, power generation, transmission, semiconductors and related infrastructure, expanding access to federal land and reducing regulatory barriers to major projects. Combined with the tax incentives above, the objective is clear: lower the cost and shorten the time required to deploy capital in the US. 7. Credit conditions remain supportive US investment-grade and high-yield spreads remain tight at roughly 78bp and 271bp and bank lending conditions for businesses are no longer tightening. The latest Fed survey shows unchanged Commercial and Industrial lending standards, easier terms and stronger loan demand from large and mid-sized companies. Defaults remain contained, with stress concentrated mainly among weaker borrowers rather than the broader corporate sector. 8. Liquidity remains abundant. US money-market fund assets have reached a record $ 7.91tn, while reserve balances at the Federal Reserve remain close to $ 3tn. The financial system continues to operate with substantial liquidity and there is little evidence of the liquidity scarcity or funding stress typically associated with the end of an equity cycle. 9. Valuations are elevated but they remain supported by unusually strong earnings growth. The S&P 500 trades at roughly 20x forward earnings, only modestly above its 10-year average of 19x, while the equal-weight index trades closer to 16x. Information Technology trades around 22x, near the middle of its 10-year valuation range. With earnings estimates still moving higher, profits rather than multiple expansion remain the fundamental support for the market. AI is a driving force behind the Fourth Industrial Revolution. “It is a party, it is 11pm and the party will stop at 4am.” Risks: · Sticky inflation / higher rates · AI ROIC / capex sustainability · A sharper labour-market slowdown · Fiscal deficits / rising long-end Treasury yields · Geopolitical shocks: Middle East energy supply and tail risk in Taiwan $SPX $SPY $NDX $QQQ $NVDA $AAPL $GOOGL $MSFT $AMZN $META $AVGO $TSLA $SPCX $MU $AMD $ORCL https://t.co/VLSpUH2FNI
ArsValorisAI's tweet photo. Why the US Equity Market Will Continue to Rally. 1. US growth remains supportive for equities. Private domestic demand grew 3.9% annualised in Q2, nominal GDP expanded 7.9% and both manufacturing and services are accelerating. The combination of resilient consumption, robust capex and strong nominal growth remains constructive for corporate earnings. 2. Corporate earnings remain a powerful engine for the bull market. Q2 S&P 500 EPS growth is tracking at 45% YoY or 26% excluding non-core investment gains at mega-cap tech, the fastest underlying pace since 2021. The median S&P 500 company is also growing EPS by 12% while forward earnings estimates continue to be revised higher. 3. The AI investment cycle continues to accelerate and monetization is increasingly visible. Hyperscalers ( $GOOGL, $MSFT, $AMZN, $META, $ORCL) capex is expected to reach $ 800bn in 2026, almost double 2025 levels and more than $ 1tn in 2027. At the same time demand is accelerating with Azure +43%, Google Cloud +82% and AWS +37% YoY in Q2. AI is increasingly moving from an infrastructure buildout into actual revenues, backlogs and earnings. 4. The flow and positioning backdrop has materially improved after a broad technical reset in July. Retail investors have reduced risk, leveraged ETF assets have fallen by more than $ 60bn from their June peak, crowded AI and Tech positions have been aggressively unwound and July saw one of the largest HF de-grossing episodes in recent years with Situational Awareness an extreme example. The leverage washout was even more dramatic in Korea, where more than 1.2 million leveraged retail accounts received margin calls and roughly 320,000-360,000 were fully liquidated. Equity financing spreads have normalized, market concentration (semis) has declined and the corporate buyback bid is returning as earnings blackout windows expire. The market has shed a significant amount of marginal leverage without losing its structural sources of equity demand. 5. US tax policy remains strongly pro-investment. The One Big Beautiful Bill permanently restored 100% bonus depreciation for qualifying equipment and other business property, restored the immediate deduction of domestic R&D spending and introduced up to 100% first-year depreciation for qualifying US production facilities. These provisions lower the after-tax cost of investment, improve corporate cash flow and incentivize companies to accelerate capex, R&D and domestic production. 6. The policy backdrop remains explicitly pro-investment and pro-buildout. The administration is accelerating permitting for AI data centers, power generation, transmission, semiconductors and related infrastructure, expanding access to federal land and reducing regulatory barriers to major projects. Combined with the tax incentives above, the objective is clear: lower the cost and shorten the time required to deploy capital in the US. 7. Credit conditions remain supportive US investment-grade and high-yield spreads remain tight at roughly 78bp and 271bp and bank lending conditions for businesses are no longer tightening. The latest Fed survey shows unchanged Commercial and Industrial lending standards, easier terms and stronger loan demand from large and mid-sized companies. Defaults remain contained, with stress concentrated mainly among weaker borrowers rather than the broader corporate sector. 8. Liquidity remains abundant. US money-market fund assets have reached a record $ 7.91tn, while reserve balances at the Federal Reserve remain close to $ 3tn. The financial system continues to operate with substantial liquidity and there is little evidence of the liquidity scarcity or funding stress typically associated with the end of an equity cycle. 9. Valuations are elevated but they remain supported by unusually strong earnings growth. The S&P 500 trades at roughly 20x forward earnings, only modestly above its 10-year average of 19x, while the equal-weight index trades closer to 16x. Information Technology trades around 22x, near the middle of its 10-year valuation range. With earnings estimates still moving higher, profits rather than multiple expansion remain the fundamental support for the market. AI is a driving force behind the Fourth Industrial Revolution. “It is a party, it is 11pm and the party will stop at 4am.” Risks: · Sticky inflation / higher rates · AI ROIC / capex sustainability · A sharper labour-market slowdown · Fiscal deficits / rising long-end Treasury yields · Geopolitical shocks: Middle East energy supply and tail risk in Taiwan $SPX $SPY $NDX $QQQ $NVDA $AAPL $GOOGL $MSFT $AMZN $META $AVGO $TSLA $SPCX $MU $AMD $ORCL https://t.co/VLSpUH2FNI
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Why the US Equity Market Will Continue to Rally. $QQQ $AMD $ORCL $MRVL $INTC $NVDA $MSFT $AAPL $GOOGL $AMZN $META $AVGO $TSLA · The FED will cut this week. Over 80% of global central banks have eased rates in the past 6 months. · Liquidity is abundant. There is $7.4 trillion in money-market funds; when rates go down further, where will they go? · Fiscal impulse thanks to the One Big Beautiful Bill Act. · Credit conditions are healthy despite a few "cockroaches." Solid corporate fundamentals, low default rates, strong investor demand for yield. · Policy support from the current administration: encouraged investment in the US. · Deregulation reduces compliance burden, enables quicker permitting, and facilitates investments in AI and energy. · Inflation is moderating, nominal GDP is growing at approximately 5% this year, and unemployment is still low. · Trade deal with China. · “AI is the fourth industrial revolution.” · Mag7 earnings this week will be a beat; consensus expectations are low: Magnificent 7 EPS growth rate of 14% in 3Q while for previous quarters the realized were 28%, 28%, 31%, 32%, 35% etc. · Valuations are still arguably not that expensive. · "It is a party, it is 11pm and the party will stop at 4am." Valuations: · Price appreciation to this point has been principally driven by sustained, superior earnings growth. · The dominant companies have particularly strong balance sheets; they are profitable and capital efficient; most of their AI capex is financed by free cash flow. · Adjusted for margins, the S&P 500 multiple is average. · Valuations rarely contract in environments with above-median EPS growth and accommodative monetary policy - the likely regime into 2026.
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$AMD has reached a $1 trillion market cap. My thesis was right. Next stop: $1,000 per share within the next two years.
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$AMD to 1,000$ https://t.co/6RSCWnJq8i
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https://t.co/19kJrV4J07
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Disclosure: This account reflects my personal opinions based on publicly available information. It is not research, investment advice, or a recommendation/solicitation to buy or sell any security. I am not acting as your advisor or fiduciary. I make no representation as to completeness or accuracy; posts are as of the time written and may change without notice. I have no obligation to update any post. I may hold or change positions in securities mentioned without notice. I receive no compensation from any company mentioned. These posts are my own and not made on behalf of any employer. For informational purposes only.
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Why the US Equity Market Will Continue to Rally. https://t.co/heYbtazYUm
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$AMD to 1,000$ https://t.co/6RSCWnJq8i
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@amitisinvesting Hi @amitisinvesting , All, Please take a look at my detailed thesis on the continuation of the bull market. Cheers,
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ArsValorisAI Verified account @ArsValorisAI
Why the US Equity Market Will Continue to Rally. 1. US growth remains supportive for equities. Private domestic demand grew 3.9% annualised in Q2, nominal GDP expanded 7.9% and both manufacturing and services are accelerating. The combination of resilient consumption, robust capex and strong nominal growth remains constructive for corporate earnings. 2. Corporate earnings remain a powerful engine for the bull market. Q2 S&P 500 EPS growth is tracking at 45% YoY or 26% excluding non-core investment gains at mega-cap tech, the fastest underlying pace since 2021. The median S&P 500 company is also growing EPS by 12% while forward earnings estimates continue to be revised higher. 3. The AI investment cycle continues to accelerate and monetization is increasingly visible. Hyperscalers ( $GOOGL, $MSFT, $AMZN, $META, $ORCL) capex is expected to reach $ 800bn in 2026, almost double 2025 levels and more than $ 1tn in 2027. At the same time demand is accelerating with Azure +43%, Google Cloud +82% and AWS +37% YoY in Q2. AI is increasingly moving from an infrastructure buildout into actual revenues, backlogs and earnings. 4. The flow and positioning backdrop has materially improved after a broad technical reset in July. Retail investors have reduced risk, leveraged ETF assets have fallen by more than $ 60bn from their June peak, crowded AI and Tech positions have been aggressively unwound and July saw one of the largest HF de-grossing episodes in recent years with Situational Awareness an extreme example. The leverage washout was even more dramatic in Korea, where more than 1.2 million leveraged retail accounts received margin calls and roughly 320,000-360,000 were fully liquidated. Equity financing spreads have normalized, market concentration (semis) has declined and the corporate buyback bid is returning as earnings blackout windows expire. The market has shed a significant amount of marginal leverage without losing its structural sources of equity demand. 5. US tax policy remains strongly pro-investment. The One Big Beautiful Bill permanently restored 100% bonus depreciation for qualifying equipment and other business property, restored the immediate deduction of domestic R&D spending and introduced up to 100% first-year depreciation for qualifying US production facilities. These provisions lower the after-tax cost of investment, improve corporate cash flow and incentivize companies to accelerate capex, R&D and domestic production. 6. The policy backdrop remains explicitly pro-investment and pro-buildout. The administration is accelerating permitting for AI data centers, power generation, transmission, semiconductors and related infrastructure, expanding access to federal land and reducing regulatory barriers to major projects. Combined with the tax incentives above, the objective is clear: lower the cost and shorten the time required to deploy capital in the US. 7. Credit conditions remain supportive US investment-grade and high-yield spreads remain tight at roughly 78bp and 271bp and bank lending conditions for businesses are no longer tightening. The latest Fed survey shows unchanged Commercial and Industrial lending standards, easier terms and stronger loan demand from large and mid-sized companies. Defaults remain contained, with stress concentrated mainly among weaker borrowers rather than the broader corporate sector. 8. Liquidity remains abundant. US money-market fund assets have reached a record $ 7.91tn, while reserve balances at the Federal Reserve remain close to $ 3tn. The financial system continues to operate with substantial liquidity and there is little evidence of the liquidity scarcity or funding stress typically associated with the end of an equity cycle. 9. Valuations are elevated but they remain supported by unusually strong earnings growth. The S&P 500 trades at roughly 20x forward earnings, only modestly above its 10-year average of 19x, while the equal-weight index trades closer to 16x. Information Technology trades around 22x, near the middle of its 10-year valuation range. With earnings estimates still moving higher, profits rather than multiple expansion remain the fundamental support for the market. AI is a driving force behind the Fourth Industrial Revolution. “It is a party, it is 11pm and the party will stop at 4am.” Risks: · Sticky inflation / higher rates · AI ROIC / capex sustainability · A sharper labour-market slowdown · Fiscal deficits / rising long-end Treasury yields · Geopolitical shocks: Middle East energy supply and tail risk in Taiwan $SPX $SPY $NDX $QQQ $NVDA $AAPL $GOOGL $MSFT $AMZN $META $AVGO $TSLA $SPCX $MU $AMD $ORCL https://t.co/VLSpUH2FNI
ArsValorisAI's tweet photo. Why the US Equity Market Will Continue to Rally. 1. US growth remains supportive for equities. Private domestic demand grew 3.9% annualised in Q2, nominal GDP expanded 7.9% and both manufacturing and services are accelerating. The combination of resilient consumption, robust capex and strong nominal growth remains constructive for corporate earnings. 2. Corporate earnings remain a powerful engine for the bull market. Q2 S&P 500 EPS growth is tracking at 45% YoY or 26% excluding non-core investment gains at mega-cap tech, the fastest underlying pace since 2021. The median S&P 500 company is also growing EPS by 12% while forward earnings estimates continue to be revised higher. 3. The AI investment cycle continues to accelerate and monetization is increasingly visible. Hyperscalers ( $GOOGL, $MSFT, $AMZN, $META, $ORCL) capex is expected to reach $ 800bn in 2026, almost double 2025 levels and more than $ 1tn in 2027. At the same time demand is accelerating with Azure +43%, Google Cloud +82% and AWS +37% YoY in Q2. AI is increasingly moving from an infrastructure buildout into actual revenues, backlogs and earnings. 4. The flow and positioning backdrop has materially improved after a broad technical reset in July. Retail investors have reduced risk, leveraged ETF assets have fallen by more than $ 60bn from their June peak, crowded AI and Tech positions have been aggressively unwound and July saw one of the largest HF de-grossing episodes in recent years with Situational Awareness an extreme example. The leverage washout was even more dramatic in Korea, where more than 1.2 million leveraged retail accounts received margin calls and roughly 320,000-360,000 were fully liquidated. Equity financing spreads have normalized, market concentration (semis) has declined and the corporate buyback bid is returning as earnings blackout windows expire. The market has shed a significant amount of marginal leverage without losing its structural sources of equity demand. 5. US tax policy remains strongly pro-investment. The One Big Beautiful Bill permanently restored 100% bonus depreciation for qualifying equipment and other business property, restored the immediate deduction of domestic R&D spending and introduced up to 100% first-year depreciation for qualifying US production facilities. These provisions lower the after-tax cost of investment, improve corporate cash flow and incentivize companies to accelerate capex, R&D and domestic production. 6. The policy backdrop remains explicitly pro-investment and pro-buildout. The administration is accelerating permitting for AI data centers, power generation, transmission, semiconductors and related infrastructure, expanding access to federal land and reducing regulatory barriers to major projects. Combined with the tax incentives above, the objective is clear: lower the cost and shorten the time required to deploy capital in the US. 7. Credit conditions remain supportive US investment-grade and high-yield spreads remain tight at roughly 78bp and 271bp and bank lending conditions for businesses are no longer tightening. The latest Fed survey shows unchanged Commercial and Industrial lending standards, easier terms and stronger loan demand from large and mid-sized companies. Defaults remain contained, with stress concentrated mainly among weaker borrowers rather than the broader corporate sector. 8. Liquidity remains abundant. US money-market fund assets have reached a record $ 7.91tn, while reserve balances at the Federal Reserve remain close to $ 3tn. The financial system continues to operate with substantial liquidity and there is little evidence of the liquidity scarcity or funding stress typically associated with the end of an equity cycle. 9. Valuations are elevated but they remain supported by unusually strong earnings growth. The S&P 500 trades at roughly 20x forward earnings, only modestly above its 10-year average of 19x, while the equal-weight index trades closer to 16x. Information Technology trades around 22x, near the middle of its 10-year valuation range. With earnings estimates still moving higher, profits rather than multiple expansion remain the fundamental support for the market. AI is a driving force behind the Fourth Industrial Revolution. “It is a party, it is 11pm and the party will stop at 4am.” Risks: · Sticky inflation / higher rates · AI ROIC / capex sustainability · A sharper labour-market slowdown · Fiscal deficits / rising long-end Treasury yields · Geopolitical shocks: Middle East energy supply and tail risk in Taiwan $SPX $SPY $NDX $QQQ $NVDA $AAPL $GOOGL $MSFT $AMZN $META $AVGO $TSLA $SPCX $MU $AMD $ORCL https://t.co/VLSpUH2FNI
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@Sam_Badawi You are right in my opinion. Here is my thesis: https://t.co/nXCLZuDhpO
ArsValorisAI's profile image
ArsValorisAI Verified account @ArsValorisAI
Why the US Equity Market Will Continue to Rally. 1. US growth remains supportive for equities. Private domestic demand grew 3.9% annualised in Q2, nominal GDP expanded 7.9% and both manufacturing and services are accelerating. The combination of resilient consumption, robust capex and strong nominal growth remains constructive for corporate earnings. 2. Corporate earnings remain a powerful engine for the bull market. Q2 S&P 500 EPS growth is tracking at 45% YoY or 26% excluding non-core investment gains at mega-cap tech, the fastest underlying pace since 2021. The median S&P 500 company is also growing EPS by 12% while forward earnings estimates continue to be revised higher. 3. The AI investment cycle continues to accelerate and monetization is increasingly visible. Hyperscalers ( $GOOGL, $MSFT, $AMZN, $META, $ORCL) capex is expected to reach $ 800bn in 2026, almost double 2025 levels and more than $ 1tn in 2027. At the same time demand is accelerating with Azure +43%, Google Cloud +82% and AWS +37% YoY in Q2. AI is increasingly moving from an infrastructure buildout into actual revenues, backlogs and earnings. 4. The flow and positioning backdrop has materially improved after a broad technical reset in July. Retail investors have reduced risk, leveraged ETF assets have fallen by more than $ 60bn from their June peak, crowded AI and Tech positions have been aggressively unwound and July saw one of the largest HF de-grossing episodes in recent years with Situational Awareness an extreme example. The leverage washout was even more dramatic in Korea, where more than 1.2 million leveraged retail accounts received margin calls and roughly 320,000-360,000 were fully liquidated. Equity financing spreads have normalized, market concentration (semis) has declined and the corporate buyback bid is returning as earnings blackout windows expire. The market has shed a significant amount of marginal leverage without losing its structural sources of equity demand. 5. US tax policy remains strongly pro-investment. The One Big Beautiful Bill permanently restored 100% bonus depreciation for qualifying equipment and other business property, restored the immediate deduction of domestic R&D spending and introduced up to 100% first-year depreciation for qualifying US production facilities. These provisions lower the after-tax cost of investment, improve corporate cash flow and incentivize companies to accelerate capex, R&D and domestic production. 6. The policy backdrop remains explicitly pro-investment and pro-buildout. The administration is accelerating permitting for AI data centers, power generation, transmission, semiconductors and related infrastructure, expanding access to federal land and reducing regulatory barriers to major projects. Combined with the tax incentives above, the objective is clear: lower the cost and shorten the time required to deploy capital in the US. 7. Credit conditions remain supportive US investment-grade and high-yield spreads remain tight at roughly 78bp and 271bp and bank lending conditions for businesses are no longer tightening. The latest Fed survey shows unchanged Commercial and Industrial lending standards, easier terms and stronger loan demand from large and mid-sized companies. Defaults remain contained, with stress concentrated mainly among weaker borrowers rather than the broader corporate sector. 8. Liquidity remains abundant. US money-market fund assets have reached a record $ 7.91tn, while reserve balances at the Federal Reserve remain close to $ 3tn. The financial system continues to operate with substantial liquidity and there is little evidence of the liquidity scarcity or funding stress typically associated with the end of an equity cycle. 9. Valuations are elevated but they remain supported by unusually strong earnings growth. The S&P 500 trades at roughly 20x forward earnings, only modestly above its 10-year average of 19x, while the equal-weight index trades closer to 16x. Information Technology trades around 22x, near the middle of its 10-year valuation range. With earnings estimates still moving higher, profits rather than multiple expansion remain the fundamental support for the market. AI is a driving force behind the Fourth Industrial Revolution. “It is a party, it is 11pm and the party will stop at 4am.” Risks: · Sticky inflation / higher rates · AI ROIC / capex sustainability · A sharper labour-market slowdown · Fiscal deficits / rising long-end Treasury yields · Geopolitical shocks: Middle East energy supply and tail risk in Taiwan $SPX $SPY $NDX $QQQ $NVDA $AAPL $GOOGL $MSFT $AMZN $META $AVGO $TSLA $SPCX $MU $AMD $ORCL https://t.co/VLSpUH2FNI
ArsValorisAI's tweet photo. Why the US Equity Market Will Continue to Rally. 1. US growth remains supportive for equities. Private domestic demand grew 3.9% annualised in Q2, nominal GDP expanded 7.9% and both manufacturing and services are accelerating. The combination of resilient consumption, robust capex and strong nominal growth remains constructive for corporate earnings. 2. Corporate earnings remain a powerful engine for the bull market. Q2 S&P 500 EPS growth is tracking at 45% YoY or 26% excluding non-core investment gains at mega-cap tech, the fastest underlying pace since 2021. The median S&P 500 company is also growing EPS by 12% while forward earnings estimates continue to be revised higher. 3. The AI investment cycle continues to accelerate and monetization is increasingly visible. Hyperscalers ( $GOOGL, $MSFT, $AMZN, $META, $ORCL) capex is expected to reach $ 800bn in 2026, almost double 2025 levels and more than $ 1tn in 2027. At the same time demand is accelerating with Azure +43%, Google Cloud +82% and AWS +37% YoY in Q2. AI is increasingly moving from an infrastructure buildout into actual revenues, backlogs and earnings. 4. The flow and positioning backdrop has materially improved after a broad technical reset in July. Retail investors have reduced risk, leveraged ETF assets have fallen by more than $ 60bn from their June peak, crowded AI and Tech positions have been aggressively unwound and July saw one of the largest HF de-grossing episodes in recent years with Situational Awareness an extreme example. The leverage washout was even more dramatic in Korea, where more than 1.2 million leveraged retail accounts received margin calls and roughly 320,000-360,000 were fully liquidated. Equity financing spreads have normalized, market concentration (semis) has declined and the corporate buyback bid is returning as earnings blackout windows expire. The market has shed a significant amount of marginal leverage without losing its structural sources of equity demand. 5. US tax policy remains strongly pro-investment. The One Big Beautiful Bill permanently restored 100% bonus depreciation for qualifying equipment and other business property, restored the immediate deduction of domestic R&D spending and introduced up to 100% first-year depreciation for qualifying US production facilities. These provisions lower the after-tax cost of investment, improve corporate cash flow and incentivize companies to accelerate capex, R&D and domestic production. 6. The policy backdrop remains explicitly pro-investment and pro-buildout. The administration is accelerating permitting for AI data centers, power generation, transmission, semiconductors and related infrastructure, expanding access to federal land and reducing regulatory barriers to major projects. Combined with the tax incentives above, the objective is clear: lower the cost and shorten the time required to deploy capital in the US. 7. Credit conditions remain supportive US investment-grade and high-yield spreads remain tight at roughly 78bp and 271bp and bank lending conditions for businesses are no longer tightening. The latest Fed survey shows unchanged Commercial and Industrial lending standards, easier terms and stronger loan demand from large and mid-sized companies. Defaults remain contained, with stress concentrated mainly among weaker borrowers rather than the broader corporate sector. 8. Liquidity remains abundant. US money-market fund assets have reached a record $ 7.91tn, while reserve balances at the Federal Reserve remain close to $ 3tn. The financial system continues to operate with substantial liquidity and there is little evidence of the liquidity scarcity or funding stress typically associated with the end of an equity cycle. 9. Valuations are elevated but they remain supported by unusually strong earnings growth. The S&P 500 trades at roughly 20x forward earnings, only modestly above its 10-year average of 19x, while the equal-weight index trades closer to 16x. Information Technology trades around 22x, near the middle of its 10-year valuation range. With earnings estimates still moving higher, profits rather than multiple expansion remain the fundamental support for the market. AI is a driving force behind the Fourth Industrial Revolution. “It is a party, it is 11pm and the party will stop at 4am.” Risks: · Sticky inflation / higher rates · AI ROIC / capex sustainability · A sharper labour-market slowdown · Fiscal deficits / rising long-end Treasury yields · Geopolitical shocks: Middle East energy supply and tail risk in Taiwan $SPX $SPY $NDX $QQQ $NVDA $AAPL $GOOGL $MSFT $AMZN $META $AVGO $TSLA $SPCX $MU $AMD $ORCL https://t.co/VLSpUH2FNI
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@Mr_Derivatives The markets will continue to rally. Read my analysis https://t.co/nXCLZuDhpO
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Why the US Equity Market Will Continue to Rally. 1. US growth remains supportive for equities. Private domestic demand grew 3.9% annualised in Q2, nominal GDP expanded 7.9% and both manufacturing and services are accelerating. The combination of resilient consumption, robust capex and strong nominal growth remains constructive for corporate earnings. 2. Corporate earnings remain a powerful engine for the bull market. Q2 S&P 500 EPS growth is tracking at 45% YoY or 26% excluding non-core investment gains at mega-cap tech, the fastest underlying pace since 2021. The median S&P 500 company is also growing EPS by 12% while forward earnings estimates continue to be revised higher. 3. The AI investment cycle continues to accelerate and monetization is increasingly visible. Hyperscalers ( $GOOGL, $MSFT, $AMZN, $META, $ORCL) capex is expected to reach $ 800bn in 2026, almost double 2025 levels and more than $ 1tn in 2027. At the same time demand is accelerating with Azure +43%, Google Cloud +82% and AWS +37% YoY in Q2. AI is increasingly moving from an infrastructure buildout into actual revenues, backlogs and earnings. 4. The flow and positioning backdrop has materially improved after a broad technical reset in July. Retail investors have reduced risk, leveraged ETF assets have fallen by more than $ 60bn from their June peak, crowded AI and Tech positions have been aggressively unwound and July saw one of the largest HF de-grossing episodes in recent years with Situational Awareness an extreme example. The leverage washout was even more dramatic in Korea, where more than 1.2 million leveraged retail accounts received margin calls and roughly 320,000-360,000 were fully liquidated. Equity financing spreads have normalized, market concentration (semis) has declined and the corporate buyback bid is returning as earnings blackout windows expire. The market has shed a significant amount of marginal leverage without losing its structural sources of equity demand. 5. US tax policy remains strongly pro-investment. The One Big Beautiful Bill permanently restored 100% bonus depreciation for qualifying equipment and other business property, restored the immediate deduction of domestic R&D spending and introduced up to 100% first-year depreciation for qualifying US production facilities. These provisions lower the after-tax cost of investment, improve corporate cash flow and incentivize companies to accelerate capex, R&D and domestic production. 6. The policy backdrop remains explicitly pro-investment and pro-buildout. The administration is accelerating permitting for AI data centers, power generation, transmission, semiconductors and related infrastructure, expanding access to federal land and reducing regulatory barriers to major projects. Combined with the tax incentives above, the objective is clear: lower the cost and shorten the time required to deploy capital in the US. 7. Credit conditions remain supportive US investment-grade and high-yield spreads remain tight at roughly 78bp and 271bp and bank lending conditions for businesses are no longer tightening. The latest Fed survey shows unchanged Commercial and Industrial lending standards, easier terms and stronger loan demand from large and mid-sized companies. Defaults remain contained, with stress concentrated mainly among weaker borrowers rather than the broader corporate sector. 8. Liquidity remains abundant. US money-market fund assets have reached a record $ 7.91tn, while reserve balances at the Federal Reserve remain close to $ 3tn. The financial system continues to operate with substantial liquidity and there is little evidence of the liquidity scarcity or funding stress typically associated with the end of an equity cycle. 9. Valuations are elevated but they remain supported by unusually strong earnings growth. The S&P 500 trades at roughly 20x forward earnings, only modestly above its 10-year average of 19x, while the equal-weight index trades closer to 16x. Information Technology trades around 22x, near the middle of its 10-year valuation range. With earnings estimates still moving higher, profits rather than multiple expansion remain the fundamental support for the market. AI is a driving force behind the Fourth Industrial Revolution. “It is a party, it is 11pm and the party will stop at 4am.” Risks: · Sticky inflation / higher rates · AI ROIC / capex sustainability · A sharper labour-market slowdown · Fiscal deficits / rising long-end Treasury yields · Geopolitical shocks: Middle East energy supply and tail risk in Taiwan $SPX $SPY $NDX $QQQ $NVDA $AAPL $GOOGL $MSFT $AMZN $META $AVGO $TSLA $SPCX $MU $AMD $ORCL https://t.co/VLSpUH2FNI
ArsValorisAI's tweet photo. Why the US Equity Market Will Continue to Rally. 1. US growth remains supportive for equities. Private domestic demand grew 3.9% annualised in Q2, nominal GDP expanded 7.9% and both manufacturing and services are accelerating. The combination of resilient consumption, robust capex and strong nominal growth remains constructive for corporate earnings. 2. Corporate earnings remain a powerful engine for the bull market. Q2 S&P 500 EPS growth is tracking at 45% YoY or 26% excluding non-core investment gains at mega-cap tech, the fastest underlying pace since 2021. The median S&P 500 company is also growing EPS by 12% while forward earnings estimates continue to be revised higher. 3. The AI investment cycle continues to accelerate and monetization is increasingly visible. Hyperscalers ( $GOOGL, $MSFT, $AMZN, $META, $ORCL) capex is expected to reach $ 800bn in 2026, almost double 2025 levels and more than $ 1tn in 2027. At the same time demand is accelerating with Azure +43%, Google Cloud +82% and AWS +37% YoY in Q2. AI is increasingly moving from an infrastructure buildout into actual revenues, backlogs and earnings. 4. The flow and positioning backdrop has materially improved after a broad technical reset in July. Retail investors have reduced risk, leveraged ETF assets have fallen by more than $ 60bn from their June peak, crowded AI and Tech positions have been aggressively unwound and July saw one of the largest HF de-grossing episodes in recent years with Situational Awareness an extreme example. The leverage washout was even more dramatic in Korea, where more than 1.2 million leveraged retail accounts received margin calls and roughly 320,000-360,000 were fully liquidated. Equity financing spreads have normalized, market concentration (semis) has declined and the corporate buyback bid is returning as earnings blackout windows expire. The market has shed a significant amount of marginal leverage without losing its structural sources of equity demand. 5. US tax policy remains strongly pro-investment. The One Big Beautiful Bill permanently restored 100% bonus depreciation for qualifying equipment and other business property, restored the immediate deduction of domestic R&D spending and introduced up to 100% first-year depreciation for qualifying US production facilities. These provisions lower the after-tax cost of investment, improve corporate cash flow and incentivize companies to accelerate capex, R&D and domestic production. 6. The policy backdrop remains explicitly pro-investment and pro-buildout. The administration is accelerating permitting for AI data centers, power generation, transmission, semiconductors and related infrastructure, expanding access to federal land and reducing regulatory barriers to major projects. Combined with the tax incentives above, the objective is clear: lower the cost and shorten the time required to deploy capital in the US. 7. Credit conditions remain supportive US investment-grade and high-yield spreads remain tight at roughly 78bp and 271bp and bank lending conditions for businesses are no longer tightening. The latest Fed survey shows unchanged Commercial and Industrial lending standards, easier terms and stronger loan demand from large and mid-sized companies. Defaults remain contained, with stress concentrated mainly among weaker borrowers rather than the broader corporate sector. 8. Liquidity remains abundant. US money-market fund assets have reached a record $ 7.91tn, while reserve balances at the Federal Reserve remain close to $ 3tn. The financial system continues to operate with substantial liquidity and there is little evidence of the liquidity scarcity or funding stress typically associated with the end of an equity cycle. 9. Valuations are elevated but they remain supported by unusually strong earnings growth. The S&P 500 trades at roughly 20x forward earnings, only modestly above its 10-year average of 19x, while the equal-weight index trades closer to 16x. Information Technology trades around 22x, near the middle of its 10-year valuation range. With earnings estimates still moving higher, profits rather than multiple expansion remain the fundamental support for the market. AI is a driving force behind the Fourth Industrial Revolution. “It is a party, it is 11pm and the party will stop at 4am.” Risks: · Sticky inflation / higher rates · AI ROIC / capex sustainability · A sharper labour-market slowdown · Fiscal deficits / rising long-end Treasury yields · Geopolitical shocks: Middle East energy supply and tail risk in Taiwan $SPX $SPY $NDX $QQQ $NVDA $AAPL $GOOGL $MSFT $AMZN $META $AVGO $TSLA $SPCX $MU $AMD $ORCL https://t.co/VLSpUH2FNI
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@Hedgeye And yet, the market will continue to rally slowly: https://t.co/nXCLZuDhpO
ArsValorisAI's profile image
ArsValorisAI Verified account @ArsValorisAI
Why the US Equity Market Will Continue to Rally. 1. US growth remains supportive for equities. Private domestic demand grew 3.9% annualised in Q2, nominal GDP expanded 7.9% and both manufacturing and services are accelerating. The combination of resilient consumption, robust capex and strong nominal growth remains constructive for corporate earnings. 2. Corporate earnings remain a powerful engine for the bull market. Q2 S&P 500 EPS growth is tracking at 45% YoY or 26% excluding non-core investment gains at mega-cap tech, the fastest underlying pace since 2021. The median S&P 500 company is also growing EPS by 12% while forward earnings estimates continue to be revised higher. 3. The AI investment cycle continues to accelerate and monetization is increasingly visible. Hyperscalers ( $GOOGL, $MSFT, $AMZN, $META, $ORCL) capex is expected to reach $ 800bn in 2026, almost double 2025 levels and more than $ 1tn in 2027. At the same time demand is accelerating with Azure +43%, Google Cloud +82% and AWS +37% YoY in Q2. AI is increasingly moving from an infrastructure buildout into actual revenues, backlogs and earnings. 4. The flow and positioning backdrop has materially improved after a broad technical reset in July. Retail investors have reduced risk, leveraged ETF assets have fallen by more than $ 60bn from their June peak, crowded AI and Tech positions have been aggressively unwound and July saw one of the largest HF de-grossing episodes in recent years with Situational Awareness an extreme example. The leverage washout was even more dramatic in Korea, where more than 1.2 million leveraged retail accounts received margin calls and roughly 320,000-360,000 were fully liquidated. Equity financing spreads have normalized, market concentration (semis) has declined and the corporate buyback bid is returning as earnings blackout windows expire. The market has shed a significant amount of marginal leverage without losing its structural sources of equity demand. 5. US tax policy remains strongly pro-investment. The One Big Beautiful Bill permanently restored 100% bonus depreciation for qualifying equipment and other business property, restored the immediate deduction of domestic R&D spending and introduced up to 100% first-year depreciation for qualifying US production facilities. These provisions lower the after-tax cost of investment, improve corporate cash flow and incentivize companies to accelerate capex, R&D and domestic production. 6. The policy backdrop remains explicitly pro-investment and pro-buildout. The administration is accelerating permitting for AI data centers, power generation, transmission, semiconductors and related infrastructure, expanding access to federal land and reducing regulatory barriers to major projects. Combined with the tax incentives above, the objective is clear: lower the cost and shorten the time required to deploy capital in the US. 7. Credit conditions remain supportive US investment-grade and high-yield spreads remain tight at roughly 78bp and 271bp and bank lending conditions for businesses are no longer tightening. The latest Fed survey shows unchanged Commercial and Industrial lending standards, easier terms and stronger loan demand from large and mid-sized companies. Defaults remain contained, with stress concentrated mainly among weaker borrowers rather than the broader corporate sector. 8. Liquidity remains abundant. US money-market fund assets have reached a record $ 7.91tn, while reserve balances at the Federal Reserve remain close to $ 3tn. The financial system continues to operate with substantial liquidity and there is little evidence of the liquidity scarcity or funding stress typically associated with the end of an equity cycle. 9. Valuations are elevated but they remain supported by unusually strong earnings growth. The S&P 500 trades at roughly 20x forward earnings, only modestly above its 10-year average of 19x, while the equal-weight index trades closer to 16x. Information Technology trades around 22x, near the middle of its 10-year valuation range. With earnings estimates still moving higher, profits rather than multiple expansion remain the fundamental support for the market. AI is a driving force behind the Fourth Industrial Revolution. “It is a party, it is 11pm and the party will stop at 4am.” Risks: · Sticky inflation / higher rates · AI ROIC / capex sustainability · A sharper labour-market slowdown · Fiscal deficits / rising long-end Treasury yields · Geopolitical shocks: Middle East energy supply and tail risk in Taiwan $SPX $SPY $NDX $QQQ $NVDA $AAPL $GOOGL $MSFT $AMZN $META $AVGO $TSLA $SPCX $MU $AMD $ORCL https://t.co/VLSpUH2FNI
ArsValorisAI's tweet photo. Why the US Equity Market Will Continue to Rally. 1. US growth remains supportive for equities. Private domestic demand grew 3.9% annualised in Q2, nominal GDP expanded 7.9% and both manufacturing and services are accelerating. The combination of resilient consumption, robust capex and strong nominal growth remains constructive for corporate earnings. 2. Corporate earnings remain a powerful engine for the bull market. Q2 S&P 500 EPS growth is tracking at 45% YoY or 26% excluding non-core investment gains at mega-cap tech, the fastest underlying pace since 2021. The median S&P 500 company is also growing EPS by 12% while forward earnings estimates continue to be revised higher. 3. The AI investment cycle continues to accelerate and monetization is increasingly visible. Hyperscalers ( $GOOGL, $MSFT, $AMZN, $META, $ORCL) capex is expected to reach $ 800bn in 2026, almost double 2025 levels and more than $ 1tn in 2027. At the same time demand is accelerating with Azure +43%, Google Cloud +82% and AWS +37% YoY in Q2. AI is increasingly moving from an infrastructure buildout into actual revenues, backlogs and earnings. 4. The flow and positioning backdrop has materially improved after a broad technical reset in July. Retail investors have reduced risk, leveraged ETF assets have fallen by more than $ 60bn from their June peak, crowded AI and Tech positions have been aggressively unwound and July saw one of the largest HF de-grossing episodes in recent years with Situational Awareness an extreme example. The leverage washout was even more dramatic in Korea, where more than 1.2 million leveraged retail accounts received margin calls and roughly 320,000-360,000 were fully liquidated. Equity financing spreads have normalized, market concentration (semis) has declined and the corporate buyback bid is returning as earnings blackout windows expire. The market has shed a significant amount of marginal leverage without losing its structural sources of equity demand. 5. US tax policy remains strongly pro-investment. The One Big Beautiful Bill permanently restored 100% bonus depreciation for qualifying equipment and other business property, restored the immediate deduction of domestic R&D spending and introduced up to 100% first-year depreciation for qualifying US production facilities. These provisions lower the after-tax cost of investment, improve corporate cash flow and incentivize companies to accelerate capex, R&D and domestic production. 6. The policy backdrop remains explicitly pro-investment and pro-buildout. The administration is accelerating permitting for AI data centers, power generation, transmission, semiconductors and related infrastructure, expanding access to federal land and reducing regulatory barriers to major projects. Combined with the tax incentives above, the objective is clear: lower the cost and shorten the time required to deploy capital in the US. 7. Credit conditions remain supportive US investment-grade and high-yield spreads remain tight at roughly 78bp and 271bp and bank lending conditions for businesses are no longer tightening. The latest Fed survey shows unchanged Commercial and Industrial lending standards, easier terms and stronger loan demand from large and mid-sized companies. Defaults remain contained, with stress concentrated mainly among weaker borrowers rather than the broader corporate sector. 8. Liquidity remains abundant. US money-market fund assets have reached a record $ 7.91tn, while reserve balances at the Federal Reserve remain close to $ 3tn. The financial system continues to operate with substantial liquidity and there is little evidence of the liquidity scarcity or funding stress typically associated with the end of an equity cycle. 9. Valuations are elevated but they remain supported by unusually strong earnings growth. The S&P 500 trades at roughly 20x forward earnings, only modestly above its 10-year average of 19x, while the equal-weight index trades closer to 16x. Information Technology trades around 22x, near the middle of its 10-year valuation range. With earnings estimates still moving higher, profits rather than multiple expansion remain the fundamental support for the market. AI is a driving force behind the Fourth Industrial Revolution. “It is a party, it is 11pm and the party will stop at 4am.” Risks: · Sticky inflation / higher rates · AI ROIC / capex sustainability · A sharper labour-market slowdown · Fiscal deficits / rising long-end Treasury yields · Geopolitical shocks: Middle East energy supply and tail risk in Taiwan $SPX $SPY $NDX $QQQ $NVDA $AAPL $GOOGL $MSFT $AMZN $META $AVGO $TSLA $SPCX $MU $AMD $ORCL https://t.co/VLSpUH2FNI
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@fundstrat I agree, the market will continue to slowly rally: https://t.co/nXCLZuDhpO
ArsValorisAI's profile image
ArsValorisAI Verified account @ArsValorisAI
Why the US Equity Market Will Continue to Rally. 1. US growth remains supportive for equities. Private domestic demand grew 3.9% annualised in Q2, nominal GDP expanded 7.9% and both manufacturing and services are accelerating. The combination of resilient consumption, robust capex and strong nominal growth remains constructive for corporate earnings. 2. Corporate earnings remain a powerful engine for the bull market. Q2 S&P 500 EPS growth is tracking at 45% YoY or 26% excluding non-core investment gains at mega-cap tech, the fastest underlying pace since 2021. The median S&P 500 company is also growing EPS by 12% while forward earnings estimates continue to be revised higher. 3. The AI investment cycle continues to accelerate and monetization is increasingly visible. Hyperscalers ( $GOOGL, $MSFT, $AMZN, $META, $ORCL) capex is expected to reach $ 800bn in 2026, almost double 2025 levels and more than $ 1tn in 2027. At the same time demand is accelerating with Azure +43%, Google Cloud +82% and AWS +37% YoY in Q2. AI is increasingly moving from an infrastructure buildout into actual revenues, backlogs and earnings. 4. The flow and positioning backdrop has materially improved after a broad technical reset in July. Retail investors have reduced risk, leveraged ETF assets have fallen by more than $ 60bn from their June peak, crowded AI and Tech positions have been aggressively unwound and July saw one of the largest HF de-grossing episodes in recent years with Situational Awareness an extreme example. The leverage washout was even more dramatic in Korea, where more than 1.2 million leveraged retail accounts received margin calls and roughly 320,000-360,000 were fully liquidated. Equity financing spreads have normalized, market concentration (semis) has declined and the corporate buyback bid is returning as earnings blackout windows expire. The market has shed a significant amount of marginal leverage without losing its structural sources of equity demand. 5. US tax policy remains strongly pro-investment. The One Big Beautiful Bill permanently restored 100% bonus depreciation for qualifying equipment and other business property, restored the immediate deduction of domestic R&D spending and introduced up to 100% first-year depreciation for qualifying US production facilities. These provisions lower the after-tax cost of investment, improve corporate cash flow and incentivize companies to accelerate capex, R&D and domestic production. 6. The policy backdrop remains explicitly pro-investment and pro-buildout. The administration is accelerating permitting for AI data centers, power generation, transmission, semiconductors and related infrastructure, expanding access to federal land and reducing regulatory barriers to major projects. Combined with the tax incentives above, the objective is clear: lower the cost and shorten the time required to deploy capital in the US. 7. Credit conditions remain supportive US investment-grade and high-yield spreads remain tight at roughly 78bp and 271bp and bank lending conditions for businesses are no longer tightening. The latest Fed survey shows unchanged Commercial and Industrial lending standards, easier terms and stronger loan demand from large and mid-sized companies. Defaults remain contained, with stress concentrated mainly among weaker borrowers rather than the broader corporate sector. 8. Liquidity remains abundant. US money-market fund assets have reached a record $ 7.91tn, while reserve balances at the Federal Reserve remain close to $ 3tn. The financial system continues to operate with substantial liquidity and there is little evidence of the liquidity scarcity or funding stress typically associated with the end of an equity cycle. 9. Valuations are elevated but they remain supported by unusually strong earnings growth. The S&P 500 trades at roughly 20x forward earnings, only modestly above its 10-year average of 19x, while the equal-weight index trades closer to 16x. Information Technology trades around 22x, near the middle of its 10-year valuation range. With earnings estimates still moving higher, profits rather than multiple expansion remain the fundamental support for the market. AI is a driving force behind the Fourth Industrial Revolution. “It is a party, it is 11pm and the party will stop at 4am.” Risks: · Sticky inflation / higher rates · AI ROIC / capex sustainability · A sharper labour-market slowdown · Fiscal deficits / rising long-end Treasury yields · Geopolitical shocks: Middle East energy supply and tail risk in Taiwan $SPX $SPY $NDX $QQQ $NVDA $AAPL $GOOGL $MSFT $AMZN $META $AVGO $TSLA $SPCX $MU $AMD $ORCL https://t.co/VLSpUH2FNI
ArsValorisAI's tweet photo. Why the US Equity Market Will Continue to Rally. 1. US growth remains supportive for equities. Private domestic demand grew 3.9% annualised in Q2, nominal GDP expanded 7.9% and both manufacturing and services are accelerating. The combination of resilient consumption, robust capex and strong nominal growth remains constructive for corporate earnings. 2. Corporate earnings remain a powerful engine for the bull market. Q2 S&P 500 EPS growth is tracking at 45% YoY or 26% excluding non-core investment gains at mega-cap tech, the fastest underlying pace since 2021. The median S&P 500 company is also growing EPS by 12% while forward earnings estimates continue to be revised higher. 3. The AI investment cycle continues to accelerate and monetization is increasingly visible. Hyperscalers ( $GOOGL, $MSFT, $AMZN, $META, $ORCL) capex is expected to reach $ 800bn in 2026, almost double 2025 levels and more than $ 1tn in 2027. At the same time demand is accelerating with Azure +43%, Google Cloud +82% and AWS +37% YoY in Q2. AI is increasingly moving from an infrastructure buildout into actual revenues, backlogs and earnings. 4. The flow and positioning backdrop has materially improved after a broad technical reset in July. Retail investors have reduced risk, leveraged ETF assets have fallen by more than $ 60bn from their June peak, crowded AI and Tech positions have been aggressively unwound and July saw one of the largest HF de-grossing episodes in recent years with Situational Awareness an extreme example. The leverage washout was even more dramatic in Korea, where more than 1.2 million leveraged retail accounts received margin calls and roughly 320,000-360,000 were fully liquidated. Equity financing spreads have normalized, market concentration (semis) has declined and the corporate buyback bid is returning as earnings blackout windows expire. The market has shed a significant amount of marginal leverage without losing its structural sources of equity demand. 5. US tax policy remains strongly pro-investment. The One Big Beautiful Bill permanently restored 100% bonus depreciation for qualifying equipment and other business property, restored the immediate deduction of domestic R&D spending and introduced up to 100% first-year depreciation for qualifying US production facilities. These provisions lower the after-tax cost of investment, improve corporate cash flow and incentivize companies to accelerate capex, R&D and domestic production. 6. The policy backdrop remains explicitly pro-investment and pro-buildout. The administration is accelerating permitting for AI data centers, power generation, transmission, semiconductors and related infrastructure, expanding access to federal land and reducing regulatory barriers to major projects. Combined with the tax incentives above, the objective is clear: lower the cost and shorten the time required to deploy capital in the US. 7. Credit conditions remain supportive US investment-grade and high-yield spreads remain tight at roughly 78bp and 271bp and bank lending conditions for businesses are no longer tightening. The latest Fed survey shows unchanged Commercial and Industrial lending standards, easier terms and stronger loan demand from large and mid-sized companies. Defaults remain contained, with stress concentrated mainly among weaker borrowers rather than the broader corporate sector. 8. Liquidity remains abundant. US money-market fund assets have reached a record $ 7.91tn, while reserve balances at the Federal Reserve remain close to $ 3tn. The financial system continues to operate with substantial liquidity and there is little evidence of the liquidity scarcity or funding stress typically associated with the end of an equity cycle. 9. Valuations are elevated but they remain supported by unusually strong earnings growth. The S&P 500 trades at roughly 20x forward earnings, only modestly above its 10-year average of 19x, while the equal-weight index trades closer to 16x. Information Technology trades around 22x, near the middle of its 10-year valuation range. With earnings estimates still moving higher, profits rather than multiple expansion remain the fundamental support for the market. AI is a driving force behind the Fourth Industrial Revolution. “It is a party, it is 11pm and the party will stop at 4am.” Risks: · Sticky inflation / higher rates · AI ROIC / capex sustainability · A sharper labour-market slowdown · Fiscal deficits / rising long-end Treasury yields · Geopolitical shocks: Middle East energy supply and tail risk in Taiwan $SPX $SPY $NDX $QQQ $NVDA $AAPL $GOOGL $MSFT $AMZN $META $AVGO $TSLA $SPCX $MU $AMD $ORCL https://t.co/VLSpUH2FNI
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@DivesTech @CNBCMorningCall @MorganLBrennan @TheDomino @CNBC The market will continue to rally https://t.co/nXCLZuDhpO
ArsValorisAI's profile image
ArsValorisAI Verified account @ArsValorisAI
Why the US Equity Market Will Continue to Rally. 1. US growth remains supportive for equities. Private domestic demand grew 3.9% annualised in Q2, nominal GDP expanded 7.9% and both manufacturing and services are accelerating. The combination of resilient consumption, robust capex and strong nominal growth remains constructive for corporate earnings. 2. Corporate earnings remain a powerful engine for the bull market. Q2 S&P 500 EPS growth is tracking at 45% YoY or 26% excluding non-core investment gains at mega-cap tech, the fastest underlying pace since 2021. The median S&P 500 company is also growing EPS by 12% while forward earnings estimates continue to be revised higher. 3. The AI investment cycle continues to accelerate and monetization is increasingly visible. Hyperscalers ( $GOOGL, $MSFT, $AMZN, $META, $ORCL) capex is expected to reach $ 800bn in 2026, almost double 2025 levels and more than $ 1tn in 2027. At the same time demand is accelerating with Azure +43%, Google Cloud +82% and AWS +37% YoY in Q2. AI is increasingly moving from an infrastructure buildout into actual revenues, backlogs and earnings. 4. The flow and positioning backdrop has materially improved after a broad technical reset in July. Retail investors have reduced risk, leveraged ETF assets have fallen by more than $ 60bn from their June peak, crowded AI and Tech positions have been aggressively unwound and July saw one of the largest HF de-grossing episodes in recent years with Situational Awareness an extreme example. The leverage washout was even more dramatic in Korea, where more than 1.2 million leveraged retail accounts received margin calls and roughly 320,000-360,000 were fully liquidated. Equity financing spreads have normalized, market concentration (semis) has declined and the corporate buyback bid is returning as earnings blackout windows expire. The market has shed a significant amount of marginal leverage without losing its structural sources of equity demand. 5. US tax policy remains strongly pro-investment. The One Big Beautiful Bill permanently restored 100% bonus depreciation for qualifying equipment and other business property, restored the immediate deduction of domestic R&D spending and introduced up to 100% first-year depreciation for qualifying US production facilities. These provisions lower the after-tax cost of investment, improve corporate cash flow and incentivize companies to accelerate capex, R&D and domestic production. 6. The policy backdrop remains explicitly pro-investment and pro-buildout. The administration is accelerating permitting for AI data centers, power generation, transmission, semiconductors and related infrastructure, expanding access to federal land and reducing regulatory barriers to major projects. Combined with the tax incentives above, the objective is clear: lower the cost and shorten the time required to deploy capital in the US. 7. Credit conditions remain supportive US investment-grade and high-yield spreads remain tight at roughly 78bp and 271bp and bank lending conditions for businesses are no longer tightening. The latest Fed survey shows unchanged Commercial and Industrial lending standards, easier terms and stronger loan demand from large and mid-sized companies. Defaults remain contained, with stress concentrated mainly among weaker borrowers rather than the broader corporate sector. 8. Liquidity remains abundant. US money-market fund assets have reached a record $ 7.91tn, while reserve balances at the Federal Reserve remain close to $ 3tn. The financial system continues to operate with substantial liquidity and there is little evidence of the liquidity scarcity or funding stress typically associated with the end of an equity cycle. 9. Valuations are elevated but they remain supported by unusually strong earnings growth. The S&P 500 trades at roughly 20x forward earnings, only modestly above its 10-year average of 19x, while the equal-weight index trades closer to 16x. Information Technology trades around 22x, near the middle of its 10-year valuation range. With earnings estimates still moving higher, profits rather than multiple expansion remain the fundamental support for the market. AI is a driving force behind the Fourth Industrial Revolution. “It is a party, it is 11pm and the party will stop at 4am.” Risks: · Sticky inflation / higher rates · AI ROIC / capex sustainability · A sharper labour-market slowdown · Fiscal deficits / rising long-end Treasury yields · Geopolitical shocks: Middle East energy supply and tail risk in Taiwan $SPX $SPY $NDX $QQQ $NVDA $AAPL $GOOGL $MSFT $AMZN $META $AVGO $TSLA $SPCX $MU $AMD $ORCL https://t.co/VLSpUH2FNI
ArsValorisAI's tweet photo. Why the US Equity Market Will Continue to Rally. 1. US growth remains supportive for equities. Private domestic demand grew 3.9% annualised in Q2, nominal GDP expanded 7.9% and both manufacturing and services are accelerating. The combination of resilient consumption, robust capex and strong nominal growth remains constructive for corporate earnings. 2. Corporate earnings remain a powerful engine for the bull market. Q2 S&P 500 EPS growth is tracking at 45% YoY or 26% excluding non-core investment gains at mega-cap tech, the fastest underlying pace since 2021. The median S&P 500 company is also growing EPS by 12% while forward earnings estimates continue to be revised higher. 3. The AI investment cycle continues to accelerate and monetization is increasingly visible. Hyperscalers ( $GOOGL, $MSFT, $AMZN, $META, $ORCL) capex is expected to reach $ 800bn in 2026, almost double 2025 levels and more than $ 1tn in 2027. At the same time demand is accelerating with Azure +43%, Google Cloud +82% and AWS +37% YoY in Q2. AI is increasingly moving from an infrastructure buildout into actual revenues, backlogs and earnings. 4. The flow and positioning backdrop has materially improved after a broad technical reset in July. Retail investors have reduced risk, leveraged ETF assets have fallen by more than $ 60bn from their June peak, crowded AI and Tech positions have been aggressively unwound and July saw one of the largest HF de-grossing episodes in recent years with Situational Awareness an extreme example. The leverage washout was even more dramatic in Korea, where more than 1.2 million leveraged retail accounts received margin calls and roughly 320,000-360,000 were fully liquidated. Equity financing spreads have normalized, market concentration (semis) has declined and the corporate buyback bid is returning as earnings blackout windows expire. The market has shed a significant amount of marginal leverage without losing its structural sources of equity demand. 5. US tax policy remains strongly pro-investment. The One Big Beautiful Bill permanently restored 100% bonus depreciation for qualifying equipment and other business property, restored the immediate deduction of domestic R&D spending and introduced up to 100% first-year depreciation for qualifying US production facilities. These provisions lower the after-tax cost of investment, improve corporate cash flow and incentivize companies to accelerate capex, R&D and domestic production. 6. The policy backdrop remains explicitly pro-investment and pro-buildout. The administration is accelerating permitting for AI data centers, power generation, transmission, semiconductors and related infrastructure, expanding access to federal land and reducing regulatory barriers to major projects. Combined with the tax incentives above, the objective is clear: lower the cost and shorten the time required to deploy capital in the US. 7. Credit conditions remain supportive US investment-grade and high-yield spreads remain tight at roughly 78bp and 271bp and bank lending conditions for businesses are no longer tightening. The latest Fed survey shows unchanged Commercial and Industrial lending standards, easier terms and stronger loan demand from large and mid-sized companies. Defaults remain contained, with stress concentrated mainly among weaker borrowers rather than the broader corporate sector. 8. Liquidity remains abundant. US money-market fund assets have reached a record $ 7.91tn, while reserve balances at the Federal Reserve remain close to $ 3tn. The financial system continues to operate with substantial liquidity and there is little evidence of the liquidity scarcity or funding stress typically associated with the end of an equity cycle. 9. Valuations are elevated but they remain supported by unusually strong earnings growth. The S&P 500 trades at roughly 20x forward earnings, only modestly above its 10-year average of 19x, while the equal-weight index trades closer to 16x. Information Technology trades around 22x, near the middle of its 10-year valuation range. With earnings estimates still moving higher, profits rather than multiple expansion remain the fundamental support for the market. AI is a driving force behind the Fourth Industrial Revolution. “It is a party, it is 11pm and the party will stop at 4am.” Risks: · Sticky inflation / higher rates · AI ROIC / capex sustainability · A sharper labour-market slowdown · Fiscal deficits / rising long-end Treasury yields · Geopolitical shocks: Middle East energy supply and tail risk in Taiwan $SPX $SPY $NDX $QQQ $NVDA $AAPL $GOOGL $MSFT $AMZN $META $AVGO $TSLA $SPCX $MU $AMD $ORCL https://t.co/VLSpUH2FNI
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ArsValorisAI's profile image
ArsValorisAI Verified account @ArsValorisAI
@amitisinvesting We will continue: https://t.co/nXCLZuDhpO
ArsValorisAI's profile image
ArsValorisAI Verified account @ArsValorisAI
Why the US Equity Market Will Continue to Rally. 1. US growth remains supportive for equities. Private domestic demand grew 3.9% annualised in Q2, nominal GDP expanded 7.9% and both manufacturing and services are accelerating. The combination of resilient consumption, robust capex and strong nominal growth remains constructive for corporate earnings. 2. Corporate earnings remain a powerful engine for the bull market. Q2 S&P 500 EPS growth is tracking at 45% YoY or 26% excluding non-core investment gains at mega-cap tech, the fastest underlying pace since 2021. The median S&P 500 company is also growing EPS by 12% while forward earnings estimates continue to be revised higher. 3. The AI investment cycle continues to accelerate and monetization is increasingly visible. Hyperscalers ( $GOOGL, $MSFT, $AMZN, $META, $ORCL) capex is expected to reach $ 800bn in 2026, almost double 2025 levels and more than $ 1tn in 2027. At the same time demand is accelerating with Azure +43%, Google Cloud +82% and AWS +37% YoY in Q2. AI is increasingly moving from an infrastructure buildout into actual revenues, backlogs and earnings. 4. The flow and positioning backdrop has materially improved after a broad technical reset in July. Retail investors have reduced risk, leveraged ETF assets have fallen by more than $ 60bn from their June peak, crowded AI and Tech positions have been aggressively unwound and July saw one of the largest HF de-grossing episodes in recent years with Situational Awareness an extreme example. The leverage washout was even more dramatic in Korea, where more than 1.2 million leveraged retail accounts received margin calls and roughly 320,000-360,000 were fully liquidated. Equity financing spreads have normalized, market concentration (semis) has declined and the corporate buyback bid is returning as earnings blackout windows expire. The market has shed a significant amount of marginal leverage without losing its structural sources of equity demand. 5. US tax policy remains strongly pro-investment. The One Big Beautiful Bill permanently restored 100% bonus depreciation for qualifying equipment and other business property, restored the immediate deduction of domestic R&D spending and introduced up to 100% first-year depreciation for qualifying US production facilities. These provisions lower the after-tax cost of investment, improve corporate cash flow and incentivize companies to accelerate capex, R&D and domestic production. 6. The policy backdrop remains explicitly pro-investment and pro-buildout. The administration is accelerating permitting for AI data centers, power generation, transmission, semiconductors and related infrastructure, expanding access to federal land and reducing regulatory barriers to major projects. Combined with the tax incentives above, the objective is clear: lower the cost and shorten the time required to deploy capital in the US. 7. Credit conditions remain supportive US investment-grade and high-yield spreads remain tight at roughly 78bp and 271bp and bank lending conditions for businesses are no longer tightening. The latest Fed survey shows unchanged Commercial and Industrial lending standards, easier terms and stronger loan demand from large and mid-sized companies. Defaults remain contained, with stress concentrated mainly among weaker borrowers rather than the broader corporate sector. 8. Liquidity remains abundant. US money-market fund assets have reached a record $ 7.91tn, while reserve balances at the Federal Reserve remain close to $ 3tn. The financial system continues to operate with substantial liquidity and there is little evidence of the liquidity scarcity or funding stress typically associated with the end of an equity cycle. 9. Valuations are elevated but they remain supported by unusually strong earnings growth. The S&P 500 trades at roughly 20x forward earnings, only modestly above its 10-year average of 19x, while the equal-weight index trades closer to 16x. Information Technology trades around 22x, near the middle of its 10-year valuation range. With earnings estimates still moving higher, profits rather than multiple expansion remain the fundamental support for the market. AI is a driving force behind the Fourth Industrial Revolution. “It is a party, it is 11pm and the party will stop at 4am.” Risks: · Sticky inflation / higher rates · AI ROIC / capex sustainability · A sharper labour-market slowdown · Fiscal deficits / rising long-end Treasury yields · Geopolitical shocks: Middle East energy supply and tail risk in Taiwan $SPX $SPY $NDX $QQQ $NVDA $AAPL $GOOGL $MSFT $AMZN $META $AVGO $TSLA $SPCX $MU $AMD $ORCL https://t.co/VLSpUH2FNI
ArsValorisAI's tweet photo. Why the US Equity Market Will Continue to Rally. 1. US growth remains supportive for equities. Private domestic demand grew 3.9% annualised in Q2, nominal GDP expanded 7.9% and both manufacturing and services are accelerating. The combination of resilient consumption, robust capex and strong nominal growth remains constructive for corporate earnings. 2. Corporate earnings remain a powerful engine for the bull market. Q2 S&P 500 EPS growth is tracking at 45% YoY or 26% excluding non-core investment gains at mega-cap tech, the fastest underlying pace since 2021. The median S&P 500 company is also growing EPS by 12% while forward earnings estimates continue to be revised higher. 3. The AI investment cycle continues to accelerate and monetization is increasingly visible. Hyperscalers ( $GOOGL, $MSFT, $AMZN, $META, $ORCL) capex is expected to reach $ 800bn in 2026, almost double 2025 levels and more than $ 1tn in 2027. At the same time demand is accelerating with Azure +43%, Google Cloud +82% and AWS +37% YoY in Q2. AI is increasingly moving from an infrastructure buildout into actual revenues, backlogs and earnings. 4. The flow and positioning backdrop has materially improved after a broad technical reset in July. Retail investors have reduced risk, leveraged ETF assets have fallen by more than $ 60bn from their June peak, crowded AI and Tech positions have been aggressively unwound and July saw one of the largest HF de-grossing episodes in recent years with Situational Awareness an extreme example. The leverage washout was even more dramatic in Korea, where more than 1.2 million leveraged retail accounts received margin calls and roughly 320,000-360,000 were fully liquidated. Equity financing spreads have normalized, market concentration (semis) has declined and the corporate buyback bid is returning as earnings blackout windows expire. The market has shed a significant amount of marginal leverage without losing its structural sources of equity demand. 5. US tax policy remains strongly pro-investment. The One Big Beautiful Bill permanently restored 100% bonus depreciation for qualifying equipment and other business property, restored the immediate deduction of domestic R&D spending and introduced up to 100% first-year depreciation for qualifying US production facilities. These provisions lower the after-tax cost of investment, improve corporate cash flow and incentivize companies to accelerate capex, R&D and domestic production. 6. The policy backdrop remains explicitly pro-investment and pro-buildout. The administration is accelerating permitting for AI data centers, power generation, transmission, semiconductors and related infrastructure, expanding access to federal land and reducing regulatory barriers to major projects. Combined with the tax incentives above, the objective is clear: lower the cost and shorten the time required to deploy capital in the US. 7. Credit conditions remain supportive US investment-grade and high-yield spreads remain tight at roughly 78bp and 271bp and bank lending conditions for businesses are no longer tightening. The latest Fed survey shows unchanged Commercial and Industrial lending standards, easier terms and stronger loan demand from large and mid-sized companies. Defaults remain contained, with stress concentrated mainly among weaker borrowers rather than the broader corporate sector. 8. Liquidity remains abundant. US money-market fund assets have reached a record $ 7.91tn, while reserve balances at the Federal Reserve remain close to $ 3tn. The financial system continues to operate with substantial liquidity and there is little evidence of the liquidity scarcity or funding stress typically associated with the end of an equity cycle. 9. Valuations are elevated but they remain supported by unusually strong earnings growth. The S&P 500 trades at roughly 20x forward earnings, only modestly above its 10-year average of 19x, while the equal-weight index trades closer to 16x. Information Technology trades around 22x, near the middle of its 10-year valuation range. With earnings estimates still moving higher, profits rather than multiple expansion remain the fundamental support for the market. AI is a driving force behind the Fourth Industrial Revolution. “It is a party, it is 11pm and the party will stop at 4am.” Risks: · Sticky inflation / higher rates · AI ROIC / capex sustainability · A sharper labour-market slowdown · Fiscal deficits / rising long-end Treasury yields · Geopolitical shocks: Middle East energy supply and tail risk in Taiwan $SPX $SPY $NDX $QQQ $NVDA $AAPL $GOOGL $MSFT $AMZN $META $AVGO $TSLA $SPCX $MU $AMD $ORCL https://t.co/VLSpUH2FNI
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23
ArsValorisAI's profile image
ArsValorisAI Verified account @ArsValorisAI
@KobeissiLetter It will continue: https://t.co/nXCLZuDhpO
ArsValorisAI's profile image
ArsValorisAI Verified account @ArsValorisAI
Why the US Equity Market Will Continue to Rally. 1. US growth remains supportive for equities. Private domestic demand grew 3.9% annualised in Q2, nominal GDP expanded 7.9% and both manufacturing and services are accelerating. The combination of resilient consumption, robust capex and strong nominal growth remains constructive for corporate earnings. 2. Corporate earnings remain a powerful engine for the bull market. Q2 S&P 500 EPS growth is tracking at 45% YoY or 26% excluding non-core investment gains at mega-cap tech, the fastest underlying pace since 2021. The median S&P 500 company is also growing EPS by 12% while forward earnings estimates continue to be revised higher. 3. The AI investment cycle continues to accelerate and monetization is increasingly visible. Hyperscalers ( $GOOGL, $MSFT, $AMZN, $META, $ORCL) capex is expected to reach $ 800bn in 2026, almost double 2025 levels and more than $ 1tn in 2027. At the same time demand is accelerating with Azure +43%, Google Cloud +82% and AWS +37% YoY in Q2. AI is increasingly moving from an infrastructure buildout into actual revenues, backlogs and earnings. 4. The flow and positioning backdrop has materially improved after a broad technical reset in July. Retail investors have reduced risk, leveraged ETF assets have fallen by more than $ 60bn from their June peak, crowded AI and Tech positions have been aggressively unwound and July saw one of the largest HF de-grossing episodes in recent years with Situational Awareness an extreme example. The leverage washout was even more dramatic in Korea, where more than 1.2 million leveraged retail accounts received margin calls and roughly 320,000-360,000 were fully liquidated. Equity financing spreads have normalized, market concentration (semis) has declined and the corporate buyback bid is returning as earnings blackout windows expire. The market has shed a significant amount of marginal leverage without losing its structural sources of equity demand. 5. US tax policy remains strongly pro-investment. The One Big Beautiful Bill permanently restored 100% bonus depreciation for qualifying equipment and other business property, restored the immediate deduction of domestic R&D spending and introduced up to 100% first-year depreciation for qualifying US production facilities. These provisions lower the after-tax cost of investment, improve corporate cash flow and incentivize companies to accelerate capex, R&D and domestic production. 6. The policy backdrop remains explicitly pro-investment and pro-buildout. The administration is accelerating permitting for AI data centers, power generation, transmission, semiconductors and related infrastructure, expanding access to federal land and reducing regulatory barriers to major projects. Combined with the tax incentives above, the objective is clear: lower the cost and shorten the time required to deploy capital in the US. 7. Credit conditions remain supportive US investment-grade and high-yield spreads remain tight at roughly 78bp and 271bp and bank lending conditions for businesses are no longer tightening. The latest Fed survey shows unchanged Commercial and Industrial lending standards, easier terms and stronger loan demand from large and mid-sized companies. Defaults remain contained, with stress concentrated mainly among weaker borrowers rather than the broader corporate sector. 8. Liquidity remains abundant. US money-market fund assets have reached a record $ 7.91tn, while reserve balances at the Federal Reserve remain close to $ 3tn. The financial system continues to operate with substantial liquidity and there is little evidence of the liquidity scarcity or funding stress typically associated with the end of an equity cycle. 9. Valuations are elevated but they remain supported by unusually strong earnings growth. The S&P 500 trades at roughly 20x forward earnings, only modestly above its 10-year average of 19x, while the equal-weight index trades closer to 16x. Information Technology trades around 22x, near the middle of its 10-year valuation range. With earnings estimates still moving higher, profits rather than multiple expansion remain the fundamental support for the market. AI is a driving force behind the Fourth Industrial Revolution. “It is a party, it is 11pm and the party will stop at 4am.” Risks: · Sticky inflation / higher rates · AI ROIC / capex sustainability · A sharper labour-market slowdown · Fiscal deficits / rising long-end Treasury yields · Geopolitical shocks: Middle East energy supply and tail risk in Taiwan $SPX $SPY $NDX $QQQ $NVDA $AAPL $GOOGL $MSFT $AMZN $META $AVGO $TSLA $SPCX $MU $AMD $ORCL https://t.co/VLSpUH2FNI
ArsValorisAI's tweet photo. Why the US Equity Market Will Continue to Rally. 1. US growth remains supportive for equities. Private domestic demand grew 3.9% annualised in Q2, nominal GDP expanded 7.9% and both manufacturing and services are accelerating. The combination of resilient consumption, robust capex and strong nominal growth remains constructive for corporate earnings. 2. Corporate earnings remain a powerful engine for the bull market. Q2 S&P 500 EPS growth is tracking at 45% YoY or 26% excluding non-core investment gains at mega-cap tech, the fastest underlying pace since 2021. The median S&P 500 company is also growing EPS by 12% while forward earnings estimates continue to be revised higher. 3. The AI investment cycle continues to accelerate and monetization is increasingly visible. Hyperscalers ( $GOOGL, $MSFT, $AMZN, $META, $ORCL) capex is expected to reach $ 800bn in 2026, almost double 2025 levels and more than $ 1tn in 2027. At the same time demand is accelerating with Azure +43%, Google Cloud +82% and AWS +37% YoY in Q2. AI is increasingly moving from an infrastructure buildout into actual revenues, backlogs and earnings. 4. The flow and positioning backdrop has materially improved after a broad technical reset in July. Retail investors have reduced risk, leveraged ETF assets have fallen by more than $ 60bn from their June peak, crowded AI and Tech positions have been aggressively unwound and July saw one of the largest HF de-grossing episodes in recent years with Situational Awareness an extreme example. The leverage washout was even more dramatic in Korea, where more than 1.2 million leveraged retail accounts received margin calls and roughly 320,000-360,000 were fully liquidated. Equity financing spreads have normalized, market concentration (semis) has declined and the corporate buyback bid is returning as earnings blackout windows expire. The market has shed a significant amount of marginal leverage without losing its structural sources of equity demand. 5. US tax policy remains strongly pro-investment. The One Big Beautiful Bill permanently restored 100% bonus depreciation for qualifying equipment and other business property, restored the immediate deduction of domestic R&D spending and introduced up to 100% first-year depreciation for qualifying US production facilities. These provisions lower the after-tax cost of investment, improve corporate cash flow and incentivize companies to accelerate capex, R&D and domestic production. 6. The policy backdrop remains explicitly pro-investment and pro-buildout. The administration is accelerating permitting for AI data centers, power generation, transmission, semiconductors and related infrastructure, expanding access to federal land and reducing regulatory barriers to major projects. Combined with the tax incentives above, the objective is clear: lower the cost and shorten the time required to deploy capital in the US. 7. Credit conditions remain supportive US investment-grade and high-yield spreads remain tight at roughly 78bp and 271bp and bank lending conditions for businesses are no longer tightening. The latest Fed survey shows unchanged Commercial and Industrial lending standards, easier terms and stronger loan demand from large and mid-sized companies. Defaults remain contained, with stress concentrated mainly among weaker borrowers rather than the broader corporate sector. 8. Liquidity remains abundant. US money-market fund assets have reached a record $ 7.91tn, while reserve balances at the Federal Reserve remain close to $ 3tn. The financial system continues to operate with substantial liquidity and there is little evidence of the liquidity scarcity or funding stress typically associated with the end of an equity cycle. 9. Valuations are elevated but they remain supported by unusually strong earnings growth. The S&P 500 trades at roughly 20x forward earnings, only modestly above its 10-year average of 19x, while the equal-weight index trades closer to 16x. Information Technology trades around 22x, near the middle of its 10-year valuation range. With earnings estimates still moving higher, profits rather than multiple expansion remain the fundamental support for the market. AI is a driving force behind the Fourth Industrial Revolution. “It is a party, it is 11pm and the party will stop at 4am.” Risks: · Sticky inflation / higher rates · AI ROIC / capex sustainability · A sharper labour-market slowdown · Fiscal deficits / rising long-end Treasury yields · Geopolitical shocks: Middle East energy supply and tail risk in Taiwan $SPX $SPY $NDX $QQQ $NVDA $AAPL $GOOGL $MSFT $AMZN $META $AVGO $TSLA $SPCX $MU $AMD $ORCL https://t.co/VLSpUH2FNI
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ArsValorisAI's profile image
ArsValorisAI Verified account @ArsValorisAI
The US economy remains resilient. Underlying private-sector demand remains solid. Real final sales to private domestic purchasers, which captures household consumption and business fixed investment, grew 3.9% annualised in Q2, accelerating from 1.7% in Q1. Consumer spending remains healthy while business investment continues to be an important source of growth, particularly spending on equipment, software, intellectual property and the infrastructure required for the AI buildout. At the same time nominal GDP grew 7.9% annualised in Q2. This matters for equities because corporate revenues, earnings and cash flows are ultimately measured in nominal dollars. A combination of positive real growth and strong nominal growth remains a constructive environment for corporate earnings. The more recent data suggest that this momentum has continued into Q3. The ISM Manufacturing PMI rose to 55.6 in July, its highest level since May 2022. New orders reached 56.7 and production 58.5. Services, which represent the majority of the US economy, also remain firmly expansionary: the ISM Services PMI was 54.1, with business activity at 59.1 and new orders at 57.2. The US economy is therefore seeing expansion across both manufacturing and services. The clear weak spot is employment. Payrolls declined by 23,000 in July and May and June were revised down by a combined 103,000. Hiring has slowed substantially. However unemployment remains relatively low at 4.1% and there is not yet evidence of the broad-based job destruction normally associated with a recession. For now this looks more like a significant cooling in labour demand than an outright contraction in economic activity. Inflation also remains a constraint. Headline PCE inflation was 3.7% YoY in June and core PCE 3.3%, limiting how aggressively the Federal Reserve can ease policy. Overall the picture remains constructive: strong private domestic demand, robust business investment, powerful nominal growth and expanding manufacturing and services, offset by a clearly cooling labour market and still-elevated inflation. For equities the important point is that the US economy is still generating real demand and substantial nominal growth while corporate investment remains exceptionally strong. As long as the labour-market slowdown does not develop into a broader contraction, the macroeconomic backdrop should remain supportive for revenues and earnings. $SPX $SPY $NDX $QQQ $NVDA $AAPL $GOOGL $MSFT $AMZN $META $AVGO $TSLA $SPCX $AMD $ORCL
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ArsValorisAI's profile image
ArsValorisAI Verified account @ArsValorisAI
$AMZN earnings call yesterday: “Earlier this year, we said we plan to invest approximately $200 billion in cash CapEx in 2026, the majority of which to support AI and AWS. At this level of spend and higher, we have clear line-of-sight to strong financial returns. I'll explain why.   There are two major parts of the investment, the data centers and the servers and networking equipment that go into them. These have different capital cycles. Data center capital is spent starting two years before we can put servers into them to start monetizing.   Once a data center opens with servers plugged in, we start generating significant revenue right away and then get to monetize these data centers for 30-plus years without having to spend that start-up capital again. Servers and networking equipment operate on a shorter cycle.   We typically purchase these a few months before putting them into service, so we have strong visibility into customer demand before we trigger the spend. If the demand isn't there, we won't spend the capital. For servers and networking equipment, on average, it takes a little less than three years to break even on that investment.   The servers currently have a useful life of at least five to six years and most of our AI capacity these days is being contracted for at least five-year terms. That means that we're driving significant free cash flow on the servers and network of equipment in the two to three years after we break even.   It's also worth noting that AWS has a strong track record of pulling forward breakevens on server equipment, where we've already made meaningful progress and finding ways to extend the useful life of this equipment without sacrificing customer experience. So for our data centers, which have 30-plus-year useful lives, we should get at least five to six generations of server economics, like I explained earlier, with subsequent generations after the first having even better overall economics because we don't have to repeat that upfront data center investment I mentioned earlier.”
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