Executive Summary
Goldman's ETF trading desk recorded the largest shorting of US single stocks in their prime data history and the worst hedge fund performance day since COVID on February 4th, despite the S&P being flat. This positioning extreme creates a tactical buying opportunity as the underlying bull market drivers remain intact. The firm's data shows $700 billion in hyperscaler CAPEX spending is flowing through to semiconductors while software has re-rated from 35x to 20x forward PE. Three key tensions are reshaping allocations: Russell 2000 outperforming Nasdaq 6% to 2% year-to-date as cyclical rotation accelerates, international equities capturing flows with Korea up 23% and Japan up 9%, and the emergence of 'AI productivity' as the next phase where non-tech companies adopt AI for margin expansion. The positioning unwind appears largely complete, with earnings tracking 11% growth versus 7% consensus and macro backdrop supporting 10-year yields below 5%. Goldman's AI productivity basket is up 9% year-to-date, representing companies outside traditional tech that are integrating AI into business models for cost reduction and efficiency gains.
Key Insights
what Sean Tateja said“Last week in aggregate was the largest selling of US equities since April of last year tariffs. And it was the largest shorting of US single stocks ever in the history of our prime data since the beginning of 2016.”
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