Goldman’s Molavi Says Bull and Bear Stock Drivers Set to Clash

Goldman Sachs Group Inc. macro trader Bobby Molavi likens the setup for stocks heading into the new year to a boxing match, where the bullish drivers of AI and stimulus measures confront bearish forces including stretched valuations and credit stress.

As the S&P 500 index closes in on a third consecutive year of double-digit gains, Molavi estimated that some $600 billion of capital spending from the Magnificent Seven tech megacaps is heading for the US economy. There’s also talk of income tax cuts and $2,000 stimulus checks lining up in the bull corner — and Molavi sees more positives supporting bulls’ views.

“We have the end of QT. We have continued US deficit spending. We have $1.2 trillion of buyback authorizations for 2026. We continue to see retail deploy and buy the dip. We have bank de-regulation and capital easing in 2026,” he wrote in a note to clients.

In bearish contrast, Molavi said stock valuations have been pushed to a point where they leave little room for disappointment. Market breadth has deteriorated to some of the narrowest levels of the past two decades and has become “extremely geared” to one theme: artificial intelligence and AI capex. The Goldman trader also flagged the rise of “AI circularity,” and the increasing degree to which aspects of the boom in this area were financed by expanding leverage.

Beneath the headline picture of advancing equity indexes, the situation was far less uniform, he said. He pointed to growing concerns about a so-called K-shaped economy that produced pockets of consumer strain, rising default rates among lower-income households and emerging stress in private credit. Dynamics in the labor market could also shift from providing a boost to being an obstacle, he said.