Goldman Sachs' Market Insights

Scott Rubner, managing director at Goldman Sachs, warns of the S&P 500 possibly 'overshooting' in late January.

Key Points

• Volatility as a Game Changer
  Rubner states that volatility is playing a crucial role in the market, similar to a quarterback in football, leading to significant re-leveraging across investment strategies due to lower implied volatility.

• Remarkable Inflows
  U.S. equities have seen a remarkable inflow of $186 billion over the past nine weeks, the largest surge since February 2021. Passive assets under management (AUM) hit $11.773 trillion.

• Market Sentiment
  The year 2024 has been marked by a 'buy the dip' mentality among investors, potentially spurred by the aftermath of the 2024 election.

• Liquidity Situation
  Top book liquidity stands around $34 million as the market approaches the quarterly roll period. Money market inflows year-to-date are up by $992 billion, reflecting the highest increases across asset classes, with $9 trillion currently managed in money markets.

• Impact of the Magnificent 7
  The 'Magnificent 7' stocks comprise 33% of the S&P 500 index weight.

• Historical Performance
  The market is entering the third-best two-week performance stretch since 1928, typically followed by the best two-week period since 1929 in early January.

Rubner concludes that these factors contribute to the heightened risk of the U.S. stock market 'overshooting.'