'Tariff Angst Somewhat Overhyped' Says Goldman Delta-One Desk-Head

Tariff uncertainty is once again gripping markets, according to Goldman Sachs Delta-One desk-head, Rich Privorotsky.

Squeezy rally into the end of last week (U.S. holiday and half term in Europe) after the Supreme Court struck down parts of the IEEPA tariffs.

White House reset them at 10%, only for rates to be lifted to 15% over the weekend.

In general, tariff angst still feels somewhat overhyped relative to the deeper equity trends.

Any hope that tariffs would simply fade now looks misplaced.

The practical takeaway from Friday is more uncertainty... more friction in the wheels of commerce.

A small downgrade to growth in my view, but not a huge disconnect versus where markets are trading.

Broadening Out: What stands out in the tape is the extent of the broadening out. Mega-cap tech, the NDX and the SPX are struggling to catch a sustained bid.

There are no clear signs of heavy supply, but it feels like capital is rotating elsewhere. Non-U.S. indices, whether in equities or bonds, are breaking out. Commodities continue to trade well.

Perhaps this reflects the idea that AI disproportionately disrupts knowledge work... which is a large share of the SPX... whereas global indices are more exposed to real assets, manufacturing, industrials and resources.

It makes you question how much U.S. outperformance versus the rest of the world was structural versus simply compositional.

If tech does not work… the U.S. does not work?

Oil: On commodities, oil is slightly lower after what looked like a geopolitical premium built over the weekend on fears of another potential Iranian attack.

There is a significant amount of military hardware in the region. Reports suggest some U.S. softening on nuclear terms.

Heading into midterms, there may be a preference for a deal rather than escalation… perhaps best to show the gun but do not to fire it.

Rates/Inflation: Rates are interesting. Despite the rally in commodities, nominal yields have continued to rally.

Benign CPI may have helped, but the move in rates also coincided with growing concern about AI-driven disruption.

It may be that secular disinflation and productivity gains are creeping into the the curve. 

Flows:  Net sellers last week, particularly in financials and Europe, though indices pushed to new highs alongside a range of international breakouts.

I have argued that financials increasingly look like low-moat businesses, vulnerable to technological disruption... something the market has not fully priced.

Curve flatter and lower doesn't help. 

“HFs net sold European equities at the fastest pace in 5 months, driven by long sales… Global Financials saw the largest $ net selling since early April ’25 as the sector was net sold in every region.” (PB)

Risk: The major secular theme remains durable moats versus exposed business models.

Hence the strength in industrials, energy, ROW, EM and resources… at the expense of tech, payments, brokers and other rent-seeking sectors.

This process will not be linear. Bulls will point to still robust earnings, bears to decelerating forward bookings and a thinning pipeline of announcements.

It is a bit odd to see that utilities and healthcare are performing alongside industrials/energy... again suggesting the market is screening for moats/rotating away from asset-light businesses.

The week ahead turns more micro. NVDA is the main event. CRM and INTU on software. DELL and CRWV. State of the Union will provide its own theatre.

Professional subscribers can read much more from Goldman's Sales & Trading team here at our new Marketdesk.ai portal