Goldman Sachs is cautious about the US stock market: geopolitical momentum tends to stagnate, CTA's downward asymmetric risk highlights.

In the only four trading days of this week, the US stock market ended with a radical rise towards the Friday holiday and options expiration date. AI-related themes once again became the main driver of the US stock market's upward trend, but Goldman Sachs' One-Delta trading desk warned that geopolitical momentum is starting to stall, and structural risks within the market are quietly accumulating. The US-Iran nuclear negotiations have experienced a setback, with Switzerland confirming the cancellation of the planned US-Iran talks scheduled for this Friday, and US Vice President Pence also postponing related travel. Rich Privorotsky, head of Goldman Sachs' One-Delta trading desk, pointed out that geopolitical momentum is clearly slowing down, and the expectations of increased production in Iran, priced by the oil market, are facing increasing uncertainty. At the same time, the narrative of AI competition continues to strengthen. China's AI star KNOWLEDGE ATLAS launched the flagship model GLM-5.2, which not only failed to suppress enthusiasm for tech stock investments, but further increased the necessity of spending for large-scale cloud providers, benefiting hardware providers. From a technical perspective, the combination of the low to neutral sentiment indicators and leverage effects this week significantly amplifies the volatility of the AI and tech sectors. Goldman Sachs warns that the downward asymmetric structure of Commodity Trading Advisors (CTA) strategies has already formed, and the uncertainties of the Federal Reserve's policy framework and the rising volatility in the bond market should not be underestimated. US-Iran talks break down, geopolitical premium of oil prices not fully priced in This week, there was a clear turnaround in the geopolitical situation. The Swiss Foreign Ministry confirmed the cancellation of the US-Iran nuclear negotiations and other talks scheduled to be held in Switzerland on Friday. Pence's postponed travel further confirms that the negotiations are at a standstill. Israel's ongoing military operations in Lebanon are a crucial point of friction, and Iran has demanded that the US implement the commitments made in the memorandum of understanding signed on Wednesday before rejoining the negotiations. The market is still pricing in the potential return of Iranian oil production, but the political background is becoming increasingly complicated - criticism from the US Republican Party and dissatisfaction from Israel are putting pressure on the prospects of the negotiations. Rich Privorotsky pointed out, "The core issue is a lack of trust: if Iran fully resumes exports and eliminates the risk premium in oil, it means giving up its main bargaining chip." "The market is pricing in physical oil, but has not fully discounted the lack of trust and the deteriorating momentum of the (US-Iran) agreement." It is this logic that leads the Iranian government to prefer a slower, phased implementation approach rather than an all-at-once approach. The current market pricing of physical barrels does not fully reflect this lack of trust and the continuing weakening of the agreement's momentum, leaving the possibility of underestimated risk premiums. AI competition logic strengthens, hardware manufacturers are the biggest beneficiaries This week, the AI theme continues to be the strongest driver in the market. Goldman Sachs' Siasun Robot & Automation and Automation (GSXUROBO), Storage (GSTMTMEM), and AI Semiconductor (GSCBSMHX) theme indexes all hit new highs, while the S&P index excluding AI components (SPXXAI Index) fell 56 basis points on Thursday, continuing the trend of divergence. Intel saw a single-day increase of 10%, sparked by unconfirmed reports about possible orders from Apple. Regarding the AI investment logic, Privorotsky raised an interesting point: the significance of China's new models like GLM-5.2 is not only to drive down computing costs or foster more intense market competition, but their deeper impact lies in strengthening the inherent necessity of increased investment by US tech giants. Conversely, competition in China is strengthening the inherent necessity of AI expenditures for all parties. Although the new generation of models seems to rely more on reinforcement learning and post-training techniques in their technology paths, reducing the reliance on large-scale pre-training computing power, the competition logic itself has not changed. If the perceived gap between overseas and US cutting-edge models shortens from about a year to a few months, the motivation to accelerate investment will significantly increase. Intensified competition may ultimately boost rather than compress overall AI investment. In this sense, large-scale cloud providers remain the funders of this competition, while hardware manufacturers are the primary beneficiaries. Technical factors are nearly "perfectly set up," but nearing a climax From a technical structure perspective, this week has presented a rare resonance pattern. Privorotsky points out that from a technical perspective, this week is close to a perfect environment for building positions, and it can be said that it has reached a climax. The low-to-neutral sentiment indicator - the Bull-Bear indicator - is still in the neutral range, and the CNN Fear/Greed index hovers around 30 due to the extremely low market breadth. The expiration day effect and the continued impact of leverage are mutually reinforcing and amplifying the price volatility of the AI and tech sectors. The same set of market mechanisms that accelerated the decline weeks ago are now operating in a reverse manner. However, the structural support for this recent rally is not firm: there is a significant downward asymmetry in CTAs currently, combined with post-expiration gamma roll-offs... institutional sentiment remains subdued, but retail leverage ratios are extremely high. This means that once momentum reverses, the downside potential could be quickly opened up. Federal Reserve uncertainty persists, bond volatility poses upside risks On a macro level, the Federal Reserve meeting this week cannot be ignored. Although the Middle East geopolitical situation has become the main theme of the market, the impact of the Federal Reserve cannot be completely overlooked this week. This week, the interest rate curve shows a clear flattening trend, with the front-end SOFR pricing continuing to decline, and some cross-asset relationships have begun to disconnect - the historical relationship between copper prices and the Nasdaq is one example, and the divergence between the US small-cap index Russell 2000 and SFRZ6, which is the December 2026 3-month SOFR futures contract, is another example. These signals are worth paying attention to. The more critical variable at the policy level is the effectiveness of forward guidance. This week's FOMC monetary policy meeting was the first after Jerome Powell took over as Federal Reserve Chairman, and the FOMC decision statement released after the meeting removed forward guidance on interest rates. The Federal Reserve's policy framework without substantial forward guidance will bring more uncertainty and ultimately raise bond market volatility. For fixed income investors, this means that the pricing logic of interest rate risks is undergoing structural changes, and the impact of this change has not been fully reflected in the market. This article is translated from "Wall Street View" and was written by Li Dan. GMTEight edit: Li Cheng.