Goldman Sachs The Markets
Why investors should “expect the chop to continue”
Apr 26, 2024
Brian Garrett, Head of the equity execution team, discusses the impact of weak GDP data and earnings reports on investor response. He emphasizes the expectation for ongoing equity volatility, attributing it to market factors and high expectations on AI tech stocks. The podcast also dives into the influence of AI companies on market rallies, the effect of rising treasury yields, and the importance of dissecting GDP data for market analysis.
09:38
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Quick takeaways
- Expect equity volatility to continue due to market factors like low liquidity and systemic option selling.
- AI sector earnings creating high performance expectations, impacting investor sentiments towards non-AI companies.
Deep dives
Market Volatility and Factors Affecting Liquidity
The ongoing market volatility is influenced by various factors, including the impact of the recent Fed pivot and the subsequent market rally leading to low volatility. With a selloff in markets causing a pullout of liquidity, market participants are facing challenges due to opposing factors such as increased supply, lower liquidity, and systemic option selling. Despite this, there are positive fundamentals supporting the market, including strong consumer data and low delinquencies, creating a push and pull dynamic in the market.
