Goldman cautions against blanket bearishness
Goldman Sachs’ trading desk warned dealers not to become outright bearish on U.S. stocks, arguing markets remain vulnerable to a short‑squeeze if geopolitical tensions ease — a useful counterpoint to the consensus risk‑off trade. (x.com)
Goldman’s March 2 trading‑desk note, authored by Gail Hafif and Brian Garrett, said the S&P 500 looked vulnerable after its failed attempt to clear the 7,000 level. (bloomberg.com) John Flood, Goldman’s head of Americas equities execution services, told clients that short exposure across macro products is the highest since September 2022 and that hedge‑fund gross exposure is running near an all‑time high of about 307%, a configuration he said could produce a 2%–3% straight‑line index move if hedges are unwound. (bloomberg.com) Goldman’s note cited FINRA‑based data showing the median S&P 500 stock had short interest equal to 2.3% of market capitalization as of Oct. 22, a level in the 67th percentile across the past 30 years. (investing.com) The trading desk quantified recent deleveraging: momentum‑chasing commodity trading advisers sold nearly $55 billion of U.S. equities since the start of March, asset managers trimmed about $51 billion of S&P 500 exposure over three weeks, and CTAs stood short roughly $18.4 billion of U.S. equities. (morningstar.com) Goldman estimated that a sustained rally could prompt as much as $86 billion of re‑leveraging from those institutional sellers over the next month, amplifying any relief move. (morningstar.com) The desk highlighted a dealer‑gamma regime shift — from short‑gamma behavior that amplifies selloffs to a longer‑gamma posture that dampens directionality — a change Goldman says will alter mechanical hedging flows around expiries and strike clusters. (morningstar.com) (d28lcup14p4e72.cloudfront.net)
