Bullish on equities, structural higher growth thesis (with Tom, Guy, Anna)

Max Kettner

I can't be more bullish because I'm already maximum bullish. Survey-based sentiment has deteriorated again, which is good. The Fed will likely be boring next week compared to what's priced, and if the IPO goes well, we could be a couple percent higher.

Sentiment took a hit in the last two weeks. Survey-based sentiment among retail has deteriorated quite a lot. That's a contrarian positive.

Max Kettner

The equity supply from the SpaceX IPO is not a concern. Passive inflows in the US are $400 billion already, and we have $80 billion per month. The $75 billion supply is easily absorbed.

We underestimate the wealth effect in the US. Last year, the change in US household wealth was $1.6 trillion, almost the entire fiscal deficit. The top 10% drive 50% of consumption; the lower 20% drive only 5-6%.

Max Kettner

We are in a structurally higher nominal growth world, meaning structurally higher revenue growth. If margins don't change, earnings grow faster. You have to be always slightly overweight equities; it costs too much to shift into cash.

To be properly bearish needs a catalyst. To be bullish, just an absence of bearish catalysts is enough.

Max Kettner

I am long the US and Asia, ignoring Europe. Europe is a single-factor call on geopolitics (Iran). If I buy Japan, I have the domestic fiscal story, AI story, defense names, and currency story—multiple drivers.

If I buy European travel and leisure, I'm making a call on one thing: geopolitics. That's too concentrated.

Max Kettner

SpaceX launches are not the key metric; the key is how much costs come down over time. That will justify valuations. Also, Google's Turbo Quant paper suggests a method that could reduce chip usage by 6x and increase efficiency by 8x, which could call the memory trade into question.

It's the aggregate efficiency gains that matter, not single launches.

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