Goldman Sachs Trading Chief: US Stock Market Trading Remains Extremely Challenging, Suggests Simplifying Positions and Buying Gold on Dips

BlockBeats News, July 26th. Tony Pasquariello, Head of Hedge Fund Business at Goldman Sachs, stated that the current U.S. stock market is experiencing intense internal divergence, with high volatility in the momentum factor, making the market "extremely challenging to navigate." He advised investors to simplify their portfolios and concentrate risk on positions with the highest conviction. Although the overall volatility of the S&P 500 Index is limited, the gap between individual stocks and the index's implied volatility continues to widen, indicating that the demand for single-stock options and market dispersion trading remains high.

Pasquariello has turned bullish on gold. He believes that since 2026, a significant amount of speculative long positions has been washed out, central bank gold purchases have resumed, and the gold price has found support around $4000 on multiple occasions. While rising U.S. interest rates and a stronger dollar may pose short-term pressures, they provide an opportunity for investors to tactically build structural long positions on dips, with the long-term thesis primarily based on the continued increase in global government debt burdens.

Regarding AI, the related credit supply has reached $489 billion so far this year, with major spenders still actively expanding their investments. However, the market still needs to confirm whether the substantial AI capital expenditure can translate into revenue growth. Google Cloud revenue grew by 82% year-on-year, but the connection between capital expenditure and revenue growth remains unclear. The upcoming earnings reports from Microsoft, Meta, and Amazon will be the next litmus test.

Pasquariello also pointed out that the market's expectations of Fed rate hikes and the situation in Iran could intensify U.S. stock market volatility. Brent crude oil has risen by 33% month-to-date, and the escalation of conflicts to regions like the Red Sea has further complicated the situation. The funding environment is relatively positive, with the large-scale financing deals from previous periods now mostly absorbed. As the earnings season nears its end, stock buybacks in August are expected to accelerate significantly.