Hedge funds turn more cautious on equities amid interest-rate and energy volatility

Goldman Sachs' Mark Wilson explains that Europe is more vulnerable to energy shocks, and that rising interest rates and political and budget uncertainty in France are putting pressure on equity valuations and investor positions. He notes that energy costs are a weakness for industrial competitiveness but are partly reflected in Europe's low valuations, and that differences in index composition also contribute to its discount relative to the US. He presents industrial investment, rearmament, energy independence and AI adoption as paths for Europe's response, and also mentions their potential to ease demographic pressures. Forecasting US earnings growth of 27% in quarter 3 and European earnings growth of 22% in the second half, or 15% excluding energy, he distinguishes a slowdown in the pace of growth from growth in earnings themselves. For US mega-cap technology companies, he views the lag between AI capital expenditure and its translation into revenue and investment returns as a key opportunity; for Germany, he highlights industrial investment and improving earnings prospects resulting from fiscal expansion. He identifies inflation data, developments related to the Iran conflict and evidence of AI investment performance in corporate earnings as variables to monitor going forward. The figures and preferences he presents should be distinguished as observations and forecasts made at the time of the interview. All directional outlooks are the speaker's conditional judgments, not definitive short-term price predictions.