GS Privorotsky GS Basics Bear Sentiment Spike Trump Xi AI Returns

GS Privorotsky - GS Basics Bear Sentiment Spike Trump Xi AI Returns 18 Sep 2026 Rich Privorotsky · Goldman Sachs · FICC & Equities Fri 18 Sep 2026, 3:12am ET

Markets: Markets are bid and firm, and a little bit of oil relief goes a long way. Tech is back in vogue… Intel +8%, Arm +9%, SOX +3%. Rhetoric got wo

Markets: Markets are bid and firm, and a little bit of oil relief goes a long way. Tech is back in vogue… Intel +8%, Arm +9%, SOX +3%. Rhetoric got worse, multiples compressed, positioning got lighter… now prices are going up and people are chasing...Monday’s “pace the frontier” episode felt like the final nail in the coffin for people still trying to hang onto the AI capex trade. Net net, overreaction and now too pessimistic.

Sentiment: The most important thing for the equity complex is that sentiment is incredibly impaired. People are worried about the Fed, rates, energy, AI, geopolitics… there is a genuine wall of worry depressing risk appetite. AAII bulls fell to 28.8% vs bears at 53.3%… a -24.5 bull/bear spread, with bullish sentiment at its lowest since May 2025 (see below). Fear & Greed is around 30 and NAAIM survey has fallen quickly.

Fed: Then we had the Fed. I thought Warsh was hawkish. He went out of his way to frame the hike as removing a dose of accommodation and repeatedly referenced commodities, energy and geopolitics. The message seemed pretty simple… if you trade rates, you’re an oil trader now. The Fed has no control over the energy shock, but it also can’t ignore the inflationary consequences. The market initially went into a tizzy after the Fed. Equities sold off and the front end repriced, but importantly the back end was relatively stable. There is something constructive in that… taking the hard medicine at the front can help anchor the back. The total amount of tightening priced didn’t actually change that much, it mostly got pulled forward. October is now roughly 50/50. Then oil falls a couple of bucks, the 10 year goes back below 5%, and suddenly everything is fine again.

BOE/BOJ: The BOE held at 3.75% yesterday, you could argue that the tone was hawkish… 6-3, with Pill, Mann and Greene voting to hike. They are telling you inflation now expected to get slightly above 4% early next year and even Bailey’s camp acknowledging that the longer the energy shock persists, the harder the problem becomes. The interesting offset was QT. They paused active gilt sales for six months and moved toward a slower unwind this helped global duration yday. BOJ this morning fits the same theme. 25bp hike to 1.25%, the highest rate in 31 years, but it was completely expected and there were two dovish dissents, so the yen weakened after the decision. The BOJ is still telling you inflation risks are broadening and it intends to keep normalizing, but the market heard gradual.

Oil: This was really the most important variable in the last 48 hours. Signs of diplomatic progress with Iran/China as well as Iran/Saudi. East-West coming back faster than feared. Barrels moving via Hormuz.

Glass half full we are on a de-escalation path. Trump-Xi Meeting critical.

AI: Anthropic now says Claude leads 26% of its R&D work and collaborates on more than 90%. If 26% becomes 50%, then 80%, then eventually something approaching full automation, it is difficult to know where the slope goes from there. At the same time, efficiency is improving incredibly quickly. PrismML’s new Bonsai 2 is an interesting example… a 27B model compressed to just 5.9GB, while the company claims it retains 98.2% of the benchmark performance of the full precision of Qwen3.8 27B. For now the observable evidence still says compute is scarce. Nebius just raised GPU rental prices again, including roughly 20% on some capacity, while CoreWeave continues to talk about strong pricing on new contracts. So even if data center buildout ultimately comes in below the wildest GW forecasts because of power, planning and political constraints, that can actually reinforce the value of existing compute. Less supply coming online doesn’t automatically mean weaker economics for the people who already own it.

European Tail Risk: Worth watching is Russia/NATO… more drone incursions, more…