GS Privorotsky GS Basics AI Debate Flows for Sale Oil Inventories 24 Aug 2026

GS Privorotsky - GS Basics AI Debate Flows for Sale Oil Inventories 24 Aug 2026 Rich Privorotsky · Goldman Sachs · FICC & Equities Mon 24 Aug 2026, 3:02am ET

Asia: Markets a bit lower, with Samsung the standout disappointment. The issue wasn't the size of the shareholder return... it was the lack of an SK Hynix style buyback and cancellation. More broadly, it feels like another expression of the jitters around AI, inventory, capex and increasingly competitive economics across the stack. Kospi ~ -3%/Samsung ~ -4-5%.

Ai/Semis: Last week the market was captivated by Ox Alpha, a free near frontier model that nobody actually knows who built. Then over the weekend OpenAI cut GPT-5.6 Sol API pricing... same conclusion. Lots of competition, lots of price erosion. The Silicon Data LLM Token Expenditure index (SDLLMTK Index) is down almost 40% since the end of June. So far nobody intends to spend less on hardware... if anything everyone is trying to spend more. But the equities are derating anyway. Financing is the second issue. The sheer amount of issuance required to fund the AI buildout is starting to matter (AVGO $60bn debt financing deal last week). If you assign any probability that companies ultimately cannot finance everything they intend to build, the answer is either more equity or less capex. Neither deserves a higher multiple. Nobody has cut an EPS number or said they plan to spend $1 less... the equity market is simply pricing a wider range of outcomes.

Flows: Last week was decisively for sale, particularly tech, with meaningful outright long selling and macro supply. Perhaps people got too ambitious re-risking after the July drawdown and found themselves over their skis into late summer. Admittedly there were a few disappointing stories around frontier ARR/competition last week but unclear some massive fundamental revelation. Price drives narrative... after enough derating, old arguments around price deflation, saturation and competition suddenly start sounding persuasive.

NVDA: NVIDIA Wednesday is a mixed catalyst. Demand should look absurdly strong and the numbers enormous. The part I don't love is the inevitable conversation around NVIDIA becoming the "central bank of AI" and the scale of financing commitments around the ecosystem. Also watch memory... if costs keep rising, does NVIDIA simply absorb/pass them through or start engineering around memory intensity? That matters for the memory trade. Plenty of other tech information coming from conferences this week as well (I count three).

July PCE/Jackson Hole: Wednesday and should be fairly confirmatory. Think compelling arguments for core PCE around 20bps which is where consensus is landing. Jackson Hole main headlines hit Friday with Warsh's keynote. Given the move away from explicit forward guidance, I struggle to see enormous event risk unless Warsh meaningfully decides to break with his existing mantra. On the margin think most expect neutral and with a slight tail of something hawkish (although unclear what shape that might take...maybe on the balance sheet).

Rates / Bessent: The core of last week was still rates. Bessent's intervention faded somewhat, although yields remain below where they were before he stepped in. Think the intervention itself has meant more symbolically for the dollar and gold. Think it solidifies an interventionist path over one that will ever resolve the fundamental imbalances of excess spending. Think this is why longer date inflation swaps/breakevens rallied and why there was such an outsized move in precious.

Oil / Macro: Today's focus is on the Treasury's Iran sanctions announcement. The market question is whether Treasury goes directly after Chinese refiners, potentially opening another layer of friction ahead of September US-China meetings. I increasingly think oil was central to what went wrong last week. The stagflation basket went vertical as higher energy collided with weaker underlying growth. Outside the AI capex vertical, there isn't that much to sing about... softer labor, a mediocre consumer and fading fiscal/inventory tailwinds. At the same time we are still trying to spend $1tn+ on AI infrastructure next year, so nominal GDP…