US Equity Strategy 3Q26 Outlook

The report presents a bullish outlook for US equities, arguing that the market is in an industrial supercycle rather than a peak. Key drivers include $5 trillion in reshoring investments, electrification, and broad AI infrastructure spending.

Key Takeaways

• 1.The US equity market is undergoing an industrial supercycle driven by reshoring, data center buildout, and electrification, rather than a cyclical 'big top'.
• 2.AI Capex is broadening growth beyond mega-cap hyperscalers, favoring physical economy sectors like Industrials, Utilities, and Materials.
• 3.Societe Generale remains bullish on equities, increasing asset allocation from 50% to 55% in the June 2026 MAP update.

Table of Contents

• 3Q26: FIVE THEMES IN US EQUITIES
• #1 QUESTION IN APRIL: WHY IS S&P 500 RALLYING
• #1 QUESTION TODAY: WHEN IS THE “BIG TOP” FOR THE US
• #2 QUESTION TODAY: IPOS ARE THE BIG TOP SIGNAL?
• #3 QUESTION TODAY: WILL FED GET AHEAD OF THE CURVE IT'S A NEW "THE FED"
• INFLATION IS POLLUTED BUT SUPPLY SHOCKS EASING
• CENTRAL BANKS: FED AND BOJ ARE LIKELY TO STAY BEHIND THE CURVE
• CURVE PLAYS HAVE BECOME UNUSUALLY VOLATILE
• FED REMAINS HIGHLY ACCOMMODATIVE VS. 70S–80S INFLATION REGIME
• TRUMP AND THE MOST IMPORTANT DATES
• TRUMP: MID-TERM ELECTION
• TRUMP = AFFORDABILITY = LONG CONSUMERS UNTIL 3RD NOVEMBER
• THE STATE OF THE AMERICAN CONSUMER
• LONG S&P 500 EQUAL WEIGHT
• US EQUITY RISK PREMIUM (EQUITY TO BOND VALUATION)
• S&P 500: 8,000 AI SETS EPS, FED SETS THE MULTIPLE
• AI CAPEX REMAINS THE FIRST ORDER DRIVER OF EARNINGS
• YIELD CURVE FLATTENING IN A STRONG GROWTH REGIME
• MARKET DRIVERS: SECTORS, VALUE/GROWTH/SIZE
• FLOWS: US 'LEADS' VS. REST OF THE WORLD 'LAGS'
• SO, WHERE DO WE ALLOCATE?
• BROADENING EPS UPTURN: BEYOND TECH AND WITHIN INDUSTRIALS
• $5.2 TRILLION INVESTMENT PLAN
• THE POWER SUPER-CYCLE
• AI CAPEX BOOM IN 2026 IS ~1% OF US GDP
• THE 'DEREGULATION' TO BOOST INDUSTRIAL CYCLE
• 'AMERICA FIRST' IS BEYOND NASDAQ
• SG US RESHORING BENEFICIARY EQUITY INDEX (SGIXUSRE)
• TECH: AFTER 9X RETURNS, STILL CHEAPEST ON PEG RATIO
• TECH'S DOMINANCE REACHES NEW HIGHS
• TECH CASH FLOWS AT SECTOR LEVEL IS AT ALL-TIME HIGHS
• MAX DISPERSION ON FUNDAMENTALS: THE BIG 5 SPENDERS AND THE BIG 3 BENEFICIARIES
• HYPERSCALERS CAPEX TO RISE THROUGH 2028 BUT 1H 2027 IS THE ROTATION TIME
• EBITDA MARGIN: SEMIS, MEMORY VS HYPERSCALERS
• SEMICONDUCTOR 'BOOM' VS. HYPERSCALERS 'SLOWDOWN'
• AI DASHBOARD - 1
• AI DASHBOARD - 2
• KOREA EQUITY MARKET: RETAIL DOMINANCE AND RISING RISK SIGNALS
• CONCENTRATION IS MORE DOMINANT IN EMERGING MARKETS
• CLOUD GROWTH TRACKER
• AI IN A JOURNEY TO AGI: AI IS GOING 2X EVERY SEVEN MONTH
• COPPER: DEFENCE, DATA-CENTRES, ELECTRIFICATION
• LONG SG STRATEGIC RESOURCES / GREENFLATION INDEX (SGIXGNFU)
• AI SCALING IMPLIES THE NEED FOR A PHYSICAL CAPEX CYCLE
• SG GREENFLATION: SELECT STOCKS FOR ILLUSTRATION
• CONTROL OF COMMODITY-RICH TERRITORIES
• COMMODITIES: STRATEGIC AND CROSS-ASSET
• SG GLOBAL NUCLEAR (SGIXNCRU)
• SG TURNING POINT SIGNALS: TACTICAL, FUNDAMENTAL AND END OF CYCLE
• SG TURNING POINT SIGNALS: END OF THE CYCLE SIGNALS
• END OF THE CYCLE SIGNALS: LIMITED FOR A BIG BEAR MARKET
• US EQUITIES LEVERAGE: LARGE AND SMALL
• PRIVATE SECTOR LEVERAGE AND S&P 500 SELL-OFFS
• END OF CYCLE SIGNAL: THE ULTIMATE TEST IS JOBLESS CLAIMS
• SG TURNING POINT SIGNALS: TACTICAL AND FUNDAMENTAL SIGNALS
• SG GLOBAL CYCLE INDICATOR
• INVEST WITH BASKETS
• FIVE SECULAR ECOSYSTEMS AND ILLUSTRATIVE THEMATIC BASKET
• SG INVEST WITH BASKETS: 64 THEMATIC BASKETS
• MULTI-ASSET-PORTFOLIO
• SG VIEW
• SG MAP: GLOBAL ASSET ALLOCATION (2)
• SG MAP: GLOBAL ASSET ALLOCATION (3)
• SEVEN KEY CALLS: A SUMMARY OF TRADE IMPLEMENTATIONS
• ENERGY SHOCK VS AI BOOM
• US NOMINAL GROWTH SHIFTED A DECADE AGO
• BUY THE DIPS ON GOLD
• BUY THE DIPS ON GOLD - 2
• RISK PREMIUM ACROSS REGIONS (EQUITY TO BOND VALUATION)
• DRIVERS OF GLOBAL MARKETS
• JAPAN REFLATION EXTENDED
• EUROPE
• THE GREAT ROTATION OUT OF USD IS STILL ONGOING
• PERIPHERALS LIKELY TO CONTINUE OUTPERFORMING THE CORE
• EURO AREA CREDIT CONVERGENCE: CORE DOWN, PERIPHERY UP
• AN EQUITY RALLY SHOULDERED BY A HANDFUL OF SECTORS
• EUROPE'S P/BV 58% DISCOUNT TO THE US IS POSSIBLY A FLOOR (1/2)
• PRIVATE CREDIT
• SYSTEM-LEVEL SCALE AND INCREASING WEIGHT IN NEW LENDING
• RISK VS. RETURN: US PRIVATE CREDIT PROVIDED 9% RETURNS VS 3% VOL
• RECOVERY RATE – EVIDENCE OF RESILIENCY BEYOND JUST THE DEFAULT RATE
• FIRST-ORDER SHOCK LARGELY PRICED IN
• DIRECT LENDING: TRAILING DATA IS ROBUST
• MANISH KABRA BIO
• GLOBAL ASSET ALLOCATION TEAM & CONTRIBUTORS
• A REFLECTION OF THE SG HOUSE VIEW

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