Goldman Sachs warns on US stocks: Geopolitical momentum stagnates, asymmetric downside risk for CTAs emerges

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In this week with only four trading days, the US stock market ended with an aggressive rally toward the Friday holiday and options expiration, with AI-related themes once again becoming the main driver for the US market's upward movement. However, Goldman Sachs' One-Delta trading desk warns that geopolitical momentum is stalling and structural risks within the market have quietly accumulated.

The US-Iran nuclear negotiations have reversed, with Switzerland confirming that the US-Iran meeting originally scheduled for Friday has been canceled, and US Vice President Vance has also postponed related travel plans. Rich Privorotsky, head of Goldman Sachs' One-Delta trading desk, pointed out that geopolitical momentum is clearly slowing, and the Iranian production increase priced in by the oil market faces increasing uncertainty.

At the same time, the AI race narrative continues to intensify. The launch of the open-source flagship model GLM-5.2 by Chinese AI star Zhipu did not dampen the investment enthusiasm for technology stocks; instead, it further increased the necessity for hyperscale cloud providers to spend, and hardware suppliers continue to benefit.

Technically, this week's combination of low-to-neutral sentiment indicators and leverage has significantly amplified volatility in the AI and tech sectors. Goldman Sachs issued a warning: The downside asymmetric structure of Commodity Trading Advisor (CTA) strategies has already taken shape, and uncertainties in the Fed's policy framework and rising bond market volatility should not be underestimated.

US-Iran Negotiation Setbacks: Geopolitical Oil Risk Premium Not Fully Priced In

This week saw significant shifts in the geopolitical landscape. The Swiss Foreign Ministry confirmed the cancellation of the US-Iran nuclear talks scheduled for Friday in Switzerland. Vance's delayed trip further confirms the negotiations are at an impasse. Israel's continued military actions in Lebanon have become a key friction point, while Iran reportedly requires the US to first fully implement related commitments in the memorandum of understanding signed Wednesday before rejoining talks.

The market is still pricing in the path for Iranian crude oil to return, but the political backdrop is becoming increasingly complex—with growing criticism from US domestic Republicans and dissatisfaction from Israel both putting pressure on the prospects for negotiations.

Rich Privorotsky pointed out:

“The core issue is a lack of trust: if Iran fully resumes exports and oil risk premiums disappear, it would mean giving up their main bargaining chip.”

“The market is pricing for physical crude oil but has not fully discounted this lack of trust and the persistent weakening of US-Iran agreement momentum.”

It is this logic that makes the Iranian government tend toward a slower, phased implementation rather than all at once. Current pricing of physical barrels in the market does not fully reflect this trust deficit and the ongoing weakening of agreement momentum; related risk premiums may be underestimated.

AI Race Narrative Strengthens, Hardware Suppliers as Biggest Beneficiaries

This week, AI continued to be the market's strongest driving force, with Goldman Sachs' Robotics and Automation (GSXUROBO), Memory (GSTMTMEM), and AI Semiconductor (GSCBSMHX) thematic indexes all hitting new highs. In contrast, the S&P ex-AI Index (SPXXAI Index) closed down 56 basis points on Thursday, with the divergence between the two broadening. Intel jumped 10% in a single day, triggered by unconfirmed reports that it may secure Apple manufacturing orders.

Regarding AI investment logic, Privorotsky put forward a perspective worth noting: The significance of new Chinese models like GLM-5.2 is not just about driving down computing costs or sparking fiercer competition, but more deeply, it reinforces the inner necessity for US tech giants to ramp up investments. On the contrary, competition from China is actually strengthening the fundamental need for all parties to increase AI spending.

Although the new generation of models seems to rely more on reinforcement learning and post-training, reducing dependence on large-scale pre-training compute, the logic of the AI race itself has not changed.If the perceived gap between overseas and US frontier models narrows from about a year to a few months, the motivation to accelerate investment will be significantly amplified.

More intense competition may ultimately increase, rather than compress, overall AI investment. In this sense, hyperscale cloud providers are still the sources of funding in this race, but hardware companies are the primary beneficiaries.

Technical Setup Nears "Perfect," But a Climax Is Approaching

Looking at the technical structure, this week has shown a rare resonance. Privorotsky pointed out that from a technical perspective, it was close to a perfect environment for building positions this week and may already have reached a climax.

Low to neutral sentiment indicators—the Bull-Bear Index remains in the neutral zone, and the CNN Fear/Greed Index lingers around 30 due to extremely poor market breadth—combined with expiration effects and ongoing leverage, jointly amplified price volatility in AI and tech sectors. The same market mechanisms that accelerated declines weeks ago are now operating in reverse.

However, the structural support for this rally is not solid: currently, there is significant downside asymmetry in CTA positions, with post-expiration gamma rolling... Institutional sentiment remains depressed, but retail leverage is extremely high. This means that once momentum reverses, the downside could open up rapidly.

Fed Uncertainty Remains, Bond Volatility Has Upside Risk

On the macro level, this week's Fed meeting should not be ignored. Despite Middle East geopolitics being the market's main theme, investors still cannot fully ignore the Fed's impact this week.

The yield curve clearly flattened this week, with the front-end SOFR pricing trending lower while some cross-asset correlations began to break down—such as the historic relationship between copper prices and the Nasdaq, or the divergence between the US small-cap Russell 2000 and SFRZ6 (the 3-month SOFR futures contract maturing December 2026)—these signals deserve attention.

The bigger policy-level variable is the effectiveness of forward guidance. This week marked the first FOMC policy meeting under new Fed Chair Walsh, and the statement released after the meeting removed forward guidance on interest rates.

The elimination of effective forward guidance in the Fed's policy framework brings more uncertainty and will ultimately raise bond market volatility. For fixed income investors, this means the logic for pricing interest rate risk is undergoing a structural shift, the impact of which has yet to be fully priced in by the market.

Risk Warning and DisclaimerThe market entails risks, and investment should be approached with caution. This article does not constitute personal investment advice and does not take into account the individual investment objectives, financial situation, or needs of any particular user. Users should determine whether any opinions, viewpoints, or conclusions in this article are suitable for their specific circumstances. Invest accordingly at your own risk. ```