Goldman Sachs Co-Head of Global Banking & Markets: Advises Investors to Stay Invested
N.R. Finch
Goldman's co-head Ashok Varadhan offers a one-word call — stay invested — backed by three pillars: no rate hike this year, oil falling below $70, and AI-fueled resilience keeping the economy on track.
Markets are pricing in a Fed hike — why does he disagree?
Varadhan's call: no rate hike in the second half of this year; rates stay put.
Markets see it differently — CME FedWatch shows roughly 50% probability of a September hike and 63% for October.
This means → he is making a clear contrarian bet: if he is right, assets currently pressured by hike fears are undervalued.
His logic: tariff-driven inflation is fading, a Strait of Hormuz de-escalation would ease prices further, and AI — inflationary in the short term — will push prices down once capacity comes online.
What would bring oil back below $70?
Varadhan's forecast: oil falls below $70 a barrel later this year, possibly lower.
Reality check: on Monday, WTI crude climbed back above $80 a barrel after expectations cooled for a U.S.–Iran deal on Strait of Hormuz passage.
In plain terms = he is betting that geopolitical tension eventually eases and supply recovers, pulling oil from 80 back below 70 — but right now, the market is pushing the other way.
What keeps the economy standing — and what does that mean for credit?
The third pillar: economic resilience holds, nominal growth stays solid, and AI-driven productivity gains — producing more with fewer resources — provide long-term support.
This reflects his core macro view: external shocks (tariffs, oil, geopolitics) are temporary; once they fade, expansion continues.
Impact on credit → heavy bond issuance does demand higher risk compensation, but a strong economy means corporate default rates can stay low and spreads need not blow out.
How do we test whether this call holds up?
The S&P 500 has climbed back to record highs, up more than 13% in 2026 — the market has already priced in some optimism.
Whether Varadhan's "stay invested" thesis delivers comes down to two testable checkpoints: does oil actually fall back, and when do AI productivity gains show up in the data.
In plain terms = he has laid out a clear framework — and left two places where the data can prove him wrong. Investors can watch those numbers and decide for themselves.
Content is for reference only, not financial advice.