"Every Week In 2026 Has Felt Like A Year": Top Goldman Macro Trader Ruminates On Everything, Everywhere All At Once

Authored by Bobby Molavi, Goldman Sachs Partner, Macro Trader,

Where to start...

There are decades where nothing happens and weeks where decades happen

Every week in 2026 has felt like a year... the first 49 days of 2026 have felt like an eternity... news resolutions yet to be inked and fatigue already in view everywhere... and so far...there is no letting up and nowhere to hide. 

The last couple of weeks have been a strange mix of calm, panic, pain, hope, fear, more panic, more pain and some confusion. It is rare that the asset management industry across public/private, systematic/fundamental or hedge/long have had to try and navigate regime change, geo political upheaval, conflict and conflict escalation, domestic political shifts, transformational tech, tech disruption in a period where cross asset correlations and cross asset volatility are shifting this much and this quickly. The number of cross currents that are at play and affecting markets and asset prices feels unprecedented. The geo-political and macro impacting the economic and micro more than ever. Fundamentals competing with themes and narratives. Positioning and sentiment moving markets with a velocity that is hard to manage. 

The scores on the doors reflect a S&P that is down 5 of the last 6 weeks and a Nasdaq that is down 6 of the last 7. The S&P has gone from 24x to around 21x with some of the sectors within in it de-rating aggressively in the last few weeks – with financials down to 14x which is the lowest level it’s been in over 10 years.  We see a Mag 7 that is failing to be magnificent with all 7 now down on the year. It is showing higher octane outperformers like Korea/Japan/Taiwan falling from grace (with some speed).

It is upending all that has been leading year to date and driving a net down and gross lower mindset as people try to catch their breath, digest the news and plot next steps.

If we roll through the topics that seem to be in focus…..

Middle east. 

Most of last week was spent debating Escalation ladders and off ramps. As time has passed an acknowledgement that ‘it takes two to TACO’ and that the path for an outright US win less obvious. Investors increasingly argue that this looks like a miscalculation on the part of the US and what was meant to be quick has turned into something protracted. Post Venezuela there may have been an expectation (or hope) of a swift and targetted path to victory but as the days roll into weeks the market is starting to shift expectations from a 48 hour conflict and regime change towards a more prolongued situation. What also started local and ‘contained’ has quickly evolved into something regional in nature that effects the entire Middle east.

What was a one fronted conflict runs the risk of becoming multi fronted (Lebanon, Red sea?). Whatever the path from here…the second and third order impacts are going to come….in the form of regional asset allocation, supply chain disruptions, inflation, rates, consumer behaviour, C-suite and boardroom risk appetite to name but a few. There may also be longer term impacts around alliances, relationships and economies.

So what could come next? I would argue 3 paths:

1. Ceasefire talks

2. Iran Ups ante/or digs in for a more prolonged conflict….US ups anti and escalates, or

3. Trump declares victory and walks away.

Iran. 

What will be left behind when this is all over? Will we see regime change or will we see the same regime…just under ‘new’ leadership, weakened, wounded and angry? Could this signal the end of ‘peacetime’ and a return to episodic actions and more regular flare ups. How will the world deal with a structurally disrupted straight of Hormuz? Taking this further….who will insure boats to pass through the straight of Hormuz? I read that for a land crossing one super tanker (2 to 4m barrels) would need to unload onto 30,000 trucks….which if you lined only 10,000 of them would stretch 270km and take 19 days to cross by land. Either way, it is hard to see a way forward without more uncertainty and unpredictability and that requires a structurally higher risk premia and vol paradigm for the foreseeable.

Oil. 

In many ways the epicentre of what the market is watching. $80 became $90 at the start of the conflict…before hitting $120 with fear of a path to $150…then reverted back to $85 with people talking about path back to $80 and lower…before rallying again and finally gapping back above $100 with Fridays commentary about closure of the straight of Hormuz. The volatility embedded within this 10 day move has been challenging to say the least. What we do know is that the SPR release is short term fix that will reduce pressure and potentially (depending on news flow or lack of news flow elsewhere) cap oil upper bounds in the short term.

That being said, the 2 to 3m barrels per day this releases still leaves a 7m to 8m shortfall….this release wont last forever….and the damage caused from some of the recent strikes in the region will cause an ongoing capacity drag that will have an impact that moves the ‘floor’ for oil higher in the short term. At the end of the day…. longer disruption means higher prices.

Reserves. 

US produces around 20m Barrels per day and consumes around 20m barrerls per day. On the other hand....countries like China, Japan, India, Korea....are extremely dependent on Middle east oil and gas. Regions like Europe, in a world post Russian oil/gas, are almost entirely dependent. When you look at stockpiles....we see China with 100 days, Japan with 260 days, South Korea with 245 days....but countries like India with only 25 days? 

Scarcity.

While on the topic of scarcity…the entire world has shifted focus away from Ai and technology to one of the oldest ‘technologies’ on earth…that of fossil fuels. The value of oil is being keenly felt across the globe. It also serves as another reminder of the growing importance of hard, real and heavy assets.

Think about Aluminium and that 15% of the worlds supply comes from the Middle east, think about Coal – once maligned and attacked – structurally under invested in as the world pivoted green…and now extremely valuable (if pollutant), think about things like Helium and it’s importance across semis, weaponry, chips, quantum and health (MRI’s)…by the….another material that is heavily indexed to production in the middle east….not to mention many other materials of value and scarcity – Uranium, Copper, Liquid natural gas and/or Tungsten.

Private credit. 

Volatility laundering, asset/liability mismatch, gating, retail…the media seems to have embraced the private credit news cycle aggressively. Many headlines and stories talking about gating of funds…or mark to market adjustments…or reviews over back leverage…or retail and liquidity mismatches….or the risk of more ‘cockroaches’. We’ve see Blue Owl, Blackrock, Cliffwater, MS and Deutsche bank limit/cap redemption and/or gate funds in recent weeks. At the end of the day, the exposure to retail is a fraction of the private credit landscape…and so while the BDC stories are noteworthy i’m not sure they are critically important. Some would argue these actions are a ‘feature not a bug’. That being said, I do think the mark to market shifts are worth watching…as they may have a dual impact of a withdrawal of liquidity and financing availability and/or a performance impact to asset managers or owners that are heavily indexed to privates/alts/illiquid.

For me, however, what is most important in all of this is asset quality and liquidity. How will these exposures hold up in a world where terminal values are being debated and repriced at speed? How is the collateral off which these loans are extended holding up and is the quality the same as it was vs 6months ago? In areas where speed and scale become investors edge (direct lending?) did corners get cut on DD, underwriting standards and covenants that may come back to hurt people? On the other side of the coin…I think important to note that no two asset managers or portfolios are the same. There will be some that benefit from this cycle and some that will be casualties of it…but to group an asset class or group of investors into one homogenous entity…is like saying all hedge funds are the same. 

Credit. 

A note of caution here. I recently heard an argument that corrections come about when risk assets are proven to be risky and crises come about when safe assets get proven to be risky. I do feel that credit remains the anchor that calms or panics the world. For now…in aggregate…all remains calm. Hyperscalers tapping the market for $20bn, $35bn or $50bn issuances….spreads across IG, Levered loans and/or HY may still be behaving but…..junk bond yields just hit a 3 month high at 7.34% and high yield spreads starting to trend higher. 

All that being said, if you look at world of IG and the amount of exposure indexed to ‘safe’ assets at a time that the market is debating AI capex and Ai disruption and potential impacts on industries, sectors, companies, cash flows and terminal values. Also in a world where labour displacement due to ai efficiency or ai washing may in turn have knock on effects on consumption and cash flows…there is a risk of the market hoping for the best rather than pricing in growing left tails. 

Ai capex and ROI on capex. 

On the plus side…. Ai Tam shifting from IT budgets to labour budgets. Ai shifting from concept to potential to revenue. A seeming shift from experimental run rate anchored by consumers….to real annual run rate driven by enterprise. On the con side….what is the ROI on the Ai mega spend? Over $600bn of Capex expected for 2026 and a quarterly capex run rate for Amazon, Alphabet, Microsoft, Oracle and Meta around $130bn as things stand, or 3x what they were only 2 years ago. The obvious next question is what amount of revenue is required to pay back and/or generate an appropriate return on this capex? When will that revenue flow through? What we do know is that these companies have gone from cash printing machines with oligopolistic positioning in their respective verticals to cash spending machines in a ‘no choice but invest’ Ai arms race. As with previous capex explosions (rail, telecoms, internet) who the winners and losers are will be decided in the future….and the timing of ‘winning’ also variable. As the time between model release and open source ‘replicant’ narrows….and/or the quality spread between heavily funded leading model and cheaper ‘replicant’ narrows…the obvious question repeats….what will all this spend yield? Or put another way….telling to me that Energy and Data centre and Ai infra plays are up 20 to 30% since Nov 25 while Nasfaq (with its Mag 7 and Ai 41) and the GS AI basket are down 5%.

Ai disruption and disintermediation

We’ve seen a whack a mole dynamic as focus shifts from Software to wealth management to classifieds to media to consultancy to insurance to edtech to asset management to cyber and then finance and investment banking. Lines blurring between winners and laggards. Who is going to win, who is enabling, who is adopting and who is going to get disrupted. There is a bit of the baby out with the bathwater dynamic to some of these moves. Salesforce just posted $12.9bn in trailing free cash flow….+22% yoy with op margins at 35% and the company just signed a $5.6bn contract with the US Army. This doesn’t sound like a company or a segment that is in distress. Equally looking at now (or history) does not mean that things persist.

Todays cash flows are no guarantee of future cash flows no matter how ‘recurring’ they are. In a high growth segment…historical cash flows are somewhat irrelevant to the future and small (let alone seismic) shifts in future cash flows can have huge impacts on multiples and share prices. We saw this a few weeks ago when the market ‘decided’ that Software in aggregate was an Ai loser and that the sector could be reclassified from ‘growth’ to ‘utility’. Instead of forecasting out 3,5,10 years....people pulling forward what they believe to be certain and as such multiples compressing. Some of the recent selling may have been investors looking at weightings and adjusting for uncertainty and inability to predict the future with confidence. It is unlikely, software is going from eating the world to death in the space of a year, a month or a year. That being said, the profit pool available for software may be less certain and decreasing...while the profit pool available for the agentic layer increasing. As a result., the discount rate goes down and so the multiple applied for future earnings compresses hard and fast.  Another dynamic to watch is that, like other themes - defence, banks, ai capex - all boats rise on a rising tide....this software de-gross hit many if not all. In reality some of these businesses , earnings and margins will be disrupted by Ai....while others may use Ai to accelerate growth and gain more pricing power, higher margins

Unemployment.

Graduate unemployment in the US and China is rising. What will happen if Ai and Agents can offer similar or better services at cheaper prices....will that number go up? Servicenow CEO talking about unemployment at graduate level potentially rising to the 30% level in the coming years. He talked about removing 'humans' from non differentiated roles and replacing them with agents. The next obvious question....what will this mean for economy? What will it mean for fiscal liabilities? What will it mean for political backdrop (return of the left with a vengeance?) What will it mean for equity ownership (will the boomers need to sell to fund their kids)?. Whilst Ai giveth.....it also taketh away. 

Flows. 

The last week was strange. Much quietier than one would expect for some of the cross asset volatility. We saw dramatic moves in bonds, oil and equities (regional, sectoral). We see 10-year Treasuries now 4.28%, up 35bps this month…we see Oil above $100…..we see a VIX close to 30 and we’ve discussed some of the themes across private credit, ai disruption and positioning driving volatility across equities. The minor event of Quadruple witching (stock-index futures and options, as well as single-stock options and futures, all expire) this Friday to navigate…alongside the usual bouts of news flow and market moves. Worth watching CTA and retail activity from here…the former having sold around $50bn last week with an estimated $60 to 70bn to sell all things being equal this week.  

Unintended consequences.

Easing on Russian Oil sanctions yielding up to an extra $200m a day for Russia to ease the financing pressures on the Ukraine conflict. It also provides Russia leverage in any future negotiations with Kremlin investment envoy Kirill Dmitriev saying "The US is effectively acknowledging the obvious: without Russian oil, the global energy market cannot remain stable." All the while driving more tension into the US-European transatlantic relationship with both Merz and Von der Leyen being vocally opposed to the sanctions relief.

Fast wars vs long wars.

You look at Venezuela and the speed and painless nature of Operation Absolute resolve and you can imagine the allure of a 'decapitation strike'...from a distance....that would result in regime change and another 'fast' war. The problem we now face, that grows with each passing day, is that we are no longer looking at any hope of a 'fast' war. We are now in something slower and more painful. One that has pivoted from narrow and localised into regional. One that no longer only affects those in the region but also everyone everywhere (including the US). One that has a mix of literal risks from violence but arguably greater second order risks in terms of impacts to global economies and eventually consumers (jobs, inflation). 

It's all about China stupid.

In a de-globalising world with 'two great super powers'...one key question that remains un-answered is...what does this mean for China? The Chinese have lost access to Venezuelan oil and now have impaired access to Iranian oil. On top of that roughly 20% of their Energy comes from Oil and a large majority of it comes (at a cheap price) from Iran. Worth noting for certain parts of their economy....

Europe.

The region has already faced a sovereign credit crisis in 2011....then it faced a conflict on its border and a energy crisis since the onset of the Russia/Ukraine war. It is now going to face another, arguably bigger, challenge. Its energy security and vulnerability is going to come to the fore once more as its industrial base suffer from the disruptions and spot price increases that have come with the middle east conflict. IT is going to have to deal with an acceleration of inflation…and the ECB talking of hiking and reminding investors of 2008 and 2011 precedents of hikes that preceded corrections. It is going to have to deal with security, defence and re-armament….and find the means (Ex-Germany) to fund it’s ability to defend itself in a more Geopolitically uncertain world.

Europe part 2. 

Worth remembering the European equity market and the European economy are two disparate things… From an earnings perspective, Europe is dominated by Energy and Utilities, not Autos and Chemicals — even though the opposite is true for jobs, GDP and political focus. Looking back at 2022/23 and the ‘energy crisis’ for the region….we saw corporates benefitting from strong pricing power and higher consumer savings…while a tight labour market encouraged companies to hoard labour. The backdrop delivered elevated margins for longer than the maket expected with a cost ‘pass through’ to consumers that caused no demand issue. The currency shift with Eur/$ also acted as a earnings tailwind with ~55% of European revenues generated abroad and with a heavy skew to $. As we look at today….EPS estimates could prove resilient….but GDP less slow…..but the space that feels most vulnerable are Equities. Europe traded on 10.3x earnings at the 2022 trough; today it is closer to 14.8x. and while Europe remains ‘attractively valued’ relative to the US, it is no longer cheap and cheap vs history. GS strategy team favouring Defence (GSSBDEFS) and Fiscal Infrastructure (GSSTFISC), which includes renewable energy. Our HALO basket (GSSTCAPI) — capital‑intensive companies that benefit from higher real rates and supply‑chain rewiring — has again proven resilient in the latest sell‑off. For those wishing to fade the Energy move, we see Banks (Overweight) as a continued Value opportunity in Europe. 

Convergence. 

Seeing this everywhere. Growth vs Value. S&P vs S&P equal weight. Mag 7 vs S&P 493. Small/Midcap vs Large cap. Old economy and New economy. US vs Rest of World. With that convergence comes a lot of positioning pain…the cost of being U/w Rest of world, being long Size factor, being Long US (with its skew to Tech, Mag 7 and Sofwtare), the structural u/w in non ESG segments that has built up over time. We saw the market place low to no terminal value on certain assets in the Oil/Coal space over the course of the last decade…..that assessment now proving wrong. We saw many calling for the demise of Walmart in an Amazon led world before it 5x over the last 5 or so years proving doubters wrong. What then if the call that asset light and fast growing and tech first being the path to victory proves wrong?

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Worth noting that for a market dealing with so much….we remain in touching distance of all time highs and there remains a loyalty to ‘keep calm and carry on’ mindset that has paid dividends in previous vol spikes….for now. 

What next. A week with a variety of data. Pending home sales, PPI inflation data, Fed interest rate decision and statement, Philly fed manufacturing index. A huge swathe of central bank meetings from US to UK to Canada…with eyes on decisions and commentary. Also, no doubt, more headlines from the middle east on ‘what next’ and how long for the conflict.

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