Goldman Sachs Partner: Market Momentum Exposure at All-Time High, Greed Abounds with No Fear
Taylor Wilson
Goldman's momentum-strategy exposure has hit an all-time high, with multiple technical signals flashing overheating; strip out AI and energy, and S&P 500 earnings expectations have barely grown — the market is effectively betting on a single theme.
How greedy has the market actually gotten?
Goldman partner Mark Wilson sums up the current state in three words: "All Greed, No Fear."
The options put/call ratio sits at historical extremes; the five-day drawdown spread between mega-cap tech and Goldman's "unprofitable tech basket" has matched or exceeded the 2021 peak.
In plain terms = the sentiment gauge is maxed out. The last time it read this high was the height of the 2021 retail-driven frenzy.
Where is the leveraged money flowing?
Assets in 2x-and-above leveraged single-stock ETFs have surged, concentrated heavily in memory chips.
Wilson quipped: "I'm not the only one checking SK Hynix before breakfast." This means → from fund managers to retail traders, capital is piling into AI hardware through leveraged vehicles.
On Goldman's global prime-brokerage book, momentum-strategy exposure has hit an all-time record — more money is chasing winners than ever before.
Can the fundamentals actually support this?
The surface numbers look solid: the S&P 500 is up roughly 10% year-to-date, consensus EPS has been revised up about 15%, and the P/E multiple has actually contracted by 4% — valuation hasn't inflated; earnings are doing the lifting.
But Wilson flags a critical counterpoint: strip out AI infrastructure and energy, and S&P 500 EPS expectations have seen virtually no growth since January.
In plain terms = nearly all of the market's earnings momentum comes from two sectors — AI and energy. Everything else is flat. That is concentration risk, not broad recovery.
What is the pricing signal from semiconductors?
The year-on-year jump in South Korean semiconductor export prices over the past nine months is what Wilson calls "jaw-dropping."
The U.S. semiconductor and hardware PPI index has also inflected over the past 12 months, ending a deflationary trend that stretched back to the mid-1990s.
This reflects a shift in AI compute demand from "volume expansion" to "price reset" — chips are not just selling more; they are selling at higher prices.
What could break the single-narrative trade?
New Fed Chair Waller is in his first week. Wilson cites history: of the six Fed chairs since 1970, four experienced a 20%–36% market drawdown in their first year.
The second derivative of EPS growth — its acceleration — is expected to slow from this summer onward. Combined with the fading front-loaded capex pull from the "Big Beautiful Bill," capital spending could step down notably after summer.
This means → the two pillars holding up the current rally — accelerating earnings and policy stimulus — may both loosen at the same time.
If an Iran deal lands, who benefits most?
Bloomberg strategist Michael Ball notes the dominant trade is a "AI + energy" barbell — AI compute stocks on one end, the energy stocks that power them on the other.
A credible Iran deal → oil prices fall → inflation expectations cool → yields and the dollar decline → global financial conditions loosen. That is a larger relative tailwind for emerging markets, European equities, and the broader value/cyclical universe.
Ball singles out Europe: lacking energy independence, it may be the biggest beneficiary of a resolution with Iran. European single-stock volatility is only about 50% above index volatility, versus 3.5x in the U.S. Put simply = stock-picking in Europe offers far better risk-adjusted opportunity than in the U.S.
Content is for reference only, not financial advice.