HSBC’s Sels: US stocks undervalued, yields key risk

This view reframes the US equity valuation debate by tying it to AI-driven earnings potential rather than static multiples, which could shift how relative value between US and European markets is perceived. The narrowing P/E gap suggests the traditional discount on European stocks is less compelling, but the emphasis on bond yields as the primary threat highlights that macro conditions, not fundamentals, may dictate near-term direction. For market watchers, the key question is whether yield levels force a repricing of the AI optimism embedded in US earnings forecasts, or if productivity gains can outpace the discount rate drag. That tension between growth narrative and cost of capital is the real axis to monitor.