Goldman Sachs Says Capital Spending Is Powering the Bull Market

• Equities experienced an 'amazing' first half, with strong earnings across major regions, and are expected to make reasonable, broad-based gains in the second half.
• Key drivers for earnings growth include healthy nominal GDP (real GDP + inflation) and a massive, multi-year increase in CapEx around AI commercialization and infrastructure spending.
• Increased retail investor activity, including margin borrowing and leveraged ETFs, is noted as a potential vulnerability if it becomes overly speculative, but the underlying trend is still positive.
• The KOSPI index's extraordinary gains (nearly 100% YTD) are heavily influenced by its dominant chip and memory companies, a cyclical sector prone to future slowdowns.

Goldman Sachs' Peter Oppenheimer discusses the robust performance of equities in the first half of the year and projects continued gains for the second half. He attributes this to strong earnings driven by healthy nominal GDP and a significant, multi-year increase in capital expenditure, particularly in AI commercialization and broader infrastructure. While acknowledging some speculative behavior from retail investors and cyclical risks in sectors like semiconductors, the overall market outlook remains positive.