One week ago, when we commented on Goldman's Prime Brokerage election post-mortem, we noted the Prime book saw the largest increase in gross trading activity since Sep ’22, while notional US long buying this week was the second largest in the past five years (behind Mar ’23) and ranks in the 100th percentile. In short, euphoria.
However, fast-forwarding to today we find that sentiment has reversed substantially, leading to a broad slump in stocks (RTY -4%, NDX -3.4%, SPX -2.1%) as investors continue to assess a new Trump Administration, tighter financial conditions and the potential for a slower pace of rate cuts. As a result, in its latest Weekly Rundown note (available to pro subscribers), Goldman's PB desk writes that HFs net sold US equities, driven by risk-on flows with short sales outpacing long buys 2 to 1.
