Why I am "very bullish" on US equities:
• The new tax bill incentivizes capex spend by accelerating depreciation and expensing R&D investments. This comes on top of the massive capex investments into data centers to support AI. WSJ reported that the tax savings are already creating a cash windfall this year ($158B amongst S&P 500).
• AI is transformative for productivity. US companies are leading the charge, so productivity gains will be relatively higher than in other countries, which makes companies here more competitive (= global market share growth).
• Tariffs made US companies 15%* more competitive overnight (vs. their international peers) and pressure foreign companies to relocate operations (jobs) and facilities (construction) to the US. The longer-term impact is unclear & debatable, hence the controversy. *The global tariff rate = 15%, but it varies by country, especially for the largest trading partners.
• While not living up to the expectations, DOGE + BBB + Tariff revenue + 2 impending reconciliation bills in Congress claim to put the US on a pathway to break even in 5 years. I don't believe it, but even marginal deficit reductions will alleviate the interest burden and make the US economy more resilient.
If you think P/E ratios are too high in the public markets (S&P 500 = ~29x), then private equity is the place to be. Our lower-middle market Fund 1 at Minds Capital averages an entry point of 5.12x on $4.49m of EBITDA.
