Chamath Palihapitiya says he likes US stocks - with a soft landing looking likely and China's economy under the cosh

• Chamath Palihapitiya said Monday he's bullish on US stocks.
• The venture capitalist expects the Federal Reserve to achieve a so-called soft landing - where it tames inflation without crushing growth.

Chamath Palihapitiya shared an optimistic outlook for US stocks Monday, laying out a scenario where the Federal Reserve successfully achieves a "soft landing" and economic uncertainty in China boosts the appeal of American equities.

"The setup for [the] US equity market seems pretty good," the Social Capital CEO wrote on Twitter. "Especially as we look past 2023 and 2024 and focus on the US economy and earnings in 2025 and 2026, and start to like what we see."

Palihapitiya's bullish outlook comes with US stocks having already started 2023 on a tear, with the benchmark S&P 500 up 13% and the tech-heavy Nasdaq Composite soaring 29% year-to-date.

The so-called "SPAC king" believes that run of success will continue thanks to the Fed engineering a soft landing – where it manages to bring inflation down to its 2% target without tanking growth.

Palihapitiya predicted that US growth will slow but not "crater", with the central bank likely close to the end of its tightening cycle after it "skipped" a rate hike earlier this month.

Renewed optimism about the economy will then give way to "a sustained forward-looking rally and a 2024 where rates can slowly be cut," he added.

US stocks will also appeal to investors seeking to diversify away from China or Europe, according to Palihapitiya.

China's economy has shown signs of faltering, with the country's central bank responding by slashing key interest rates in a bid to stimulate growth.

Meanwhile, many European countries appear to be hurtling toward a recession – and inflation is still running close to 9% in countries including the UK and Sweden.

"Most professional money people need to be mostly invested, most of the time somewhere in the world – so when they hate one market, they are usually forced to find another they may hate a little bit less," Palihapitiya wrote Monday.

"With China entering a turbulent period where they will try to stimulate their economy and Europe slowing and likely in a recession, it leaves the US pretty much standing alone," he added.

Read more: Why China's faltering economy could soon become a top-of-mind concern for the US stock market