Equity Market Outlook & Positioning (with Carol Massar, Tim Stenovec, Natalia Kenny Jovic)

Despite today's selloff (S&P -2%, Nasdaq -4%+), Goldman remains constructive. Institutional demand for equity offerings is robust; hedge funds are highly hedged (record short macro vs long single stocks), indicating healthy skepticism. Retail continues to buy absent job losses. Systematic/CTA positioning is full but small relative to other flows. S&P has a clear path to 8000+ this year; dips are buying opportunities.

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Goldman Sachs 9.0
Investment Bank $2500.00B
John Flood 9.0

Equity Market Outlook & Positioning (with Carol Massar, Tim Stenovec, Natalia Kenny Jovic)

ndx

Flood is constructive on equities overall, sees dips as buying opportunities, and notes strong demand for tech/AI offerings. He mentions memory/semiconductors as fairly priced with room to run. This implies a positive medium-term view on NDX despite today's selloff.

rut

Flood notes retail continues to buy absent job losses, and the strong jobs report supports consumer spending. He sees a clear path for S&P to 8000, implying broad market strength that would include small caps. Dow Transports (often a RUT proxy) were up 1.3% on the day.

John Flood

The signal from mega-cap tech companies doing large equity raises (like Meta's potential tens of billions) is that the market is very healthy in terms of supply/demand. Institutional demand for these offerings has never been more robust. This is a major reason we are constructive on equities despite 24 all-time highs in the S&P 500.
John Flood

From an institutional perspective, there is still discipline and a 'wall of worry.' Hedge fund gross exposure is high (long single stocks, especially AI/tech), but they are more short macro products than ever in our data history. This shows healthy skepticism—they want to hold longs but are heavily hedged.
John Flood

Today's 2% selloff in the S&P is a buying opportunity. There have been few dips this year, and buying them has paid off. Profit-taking into the weekend and supply concerns (Meta news) are factors, but the strong jobs print moved rates higher and revived rate hike fears—that's healthy. There's still significant cash on the sidelines and short exposure for the market to climb higher.
John Flood

Our sentiment indicator shows healthy, not overextended, positioning. Despite all-time highs, mutual fund cash balances are at long-term averages, not an outlier. There's plenty of skepticism left.
John Flood

There's a slight disconnect: retail will continue to buy equities, especially with mega-cap IPOs coming. Retail only stops buying when there is true job loss—the last time they were net sellers for >2 weeks was March 2020. Until we see job destruction, that retail bid remains a healthy constant.
John Flood

What would give me pause is disappointing earnings across the S&P 500. We haven't seen any evidence of that; last quarter was solid and we're optimistic about next quarter.
John Flood

Systematic/CTA funds are relatively full on S&P exposure. The highest velocity of buying is behind us. If we have several more days like today, they will start selling. However, their positioning is very small relative to retail, corporates, hedge funds, asset managers, and sovereign wealth funds. Other demand sleeves outweigh that supply in a move lower.
John Flood

We don't think the market is overly expensive. Memory/semiconductors, one of the highest-momentum sleeves, is still fairly priced. There's real value to find outside the US (Korea, Taiwan) with fundamentals to back further upside.
John Flood

Fundamentals justify what we're seeing. We are constructive: S&P 500 dips are buying opportunities, and there's a clear path to 8000 and beyond this year.

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