GS Privorotsky GS Basics Muse & CPUs Europe Breadth Impaired

GS Privorotsky - GS Basics Muse & CPUs Europe Breadth Impaired 21 Sep 2026 Rich Privorotsky · Goldman Sachs · Managing Director, Global Banking & Markets 21 Sep 2026

Markets starting the week firm despite some tense moments over the weekend. Opening gambit still looks like restraint. Trump spent Sunday talking up escalation with Iran, but no corresponding military move and diplomatic channels remain open. With Bessent/He meeting over the weekend and Trump-Xi Thursday, feels like the pieces are there to at least try to bridge something that looks like a deal. Far from certain, but pathways remain open.

Energy: no news is good news. No fresh disruption overnight, crude lower, Saudi exports recovering despite the East-West pipe still impaired. Physical market coping better than feared. Some hope of SPR releases.

Rates/Rate vol: probably the biggest macro risk. Friday was the first real break in the energy/rates relationship… WTI down ~1.6%, yet 2s sold off to ~4.74% and 10s pushed back through 5%. MOVE re- bid ~6% to 80.6 and front end vol remains supported as the range of outcomes around Fed/BoE/ECB/BOJ stays huge. The risk is rates becoming disanchored from spot energy… oil comes down but 2nd rd inflation and rolling global rate shock are already cemented. Premature to make that conclusion, think very difficult price action for STIR crowd last couple weeks...rate vol remain the thing to watch (but still of the view this all just follows energy).

Flows/breadth: last week showed a decent amount of covering. Prime and CFTC both point the same way… people got a bit too gloomy pre Fed and seems like move down was met with covering. Energy stocks also saw notable selling. So despite all the doom, positioning is already pretty negative and on the margin people may be starting to anticipate de-escalation. Breadth is still horrendous. Outside a handful of equities, most things are trading badly and a lot of the market is still below longer term trends (see below). In a sense that makes this a coiled spring. If macro improves, we could get one of those violent snapbacks where the short leg rips (think all those consumer stocks no one likes....I prefer civil aero/airlines). Think about some Russell calls to protect the right tail while the mood is gloomy.

AI: despite the disastrous Monday open around the “Pace the Frontier” nonsense, the trade recovered through the week. I still think Monday was a buying opportunity. Product cycle has not slowed. Anthropic looks close to another release, Polymarket still has Opus odds very high into this week, and there is plenty of speculation around new OpenAI models coming down the pike.

Muse: probably the more interesting story. Has the No. 1 spot overall among free apps on the Apple U.S in just over a week after its September 8 release. Meta has basically built a direct to consumer agent factory… shopping, calls, subscriptions, admin, increasingly acting on your behalf. For anyone already running agents on a server, the idea isn’t new. What is new is packaging it for everyone with safety rails

and a credit card attached. The end state is pretty obvious… everyone has dozens of agents buying groceries, paying bills, booking holidays, sorting schools. Your productive capacity becomes you plus your team of agents. Massive efficiency unlock, massive compute multiplier. Every major lab will build one. Watch the CPU/cloud compute trade, not just GPUs.

Europe: German results were challenging for Merz. AfD first in Mecklenburg-Western Pomerania, CDU struggled, Die Linke first in Berlin. Last time an AfD shock forced Berlin to actually get moving on reform/spending....the risk now is the opposite: a severely diminished domestic mandate leading to prolonged policy gridlock.

Week ahead: Apsara Sep 22-24, Meta Connect Sep 23-24, Fed speak, PMIs Wednesday. Then the big one is Trump-Xi Thursday. Bessent/He laid some groundwork over the weekend. Setup into it feels one of hopefulness. Best case is a genuine double whammy… energy relief plus some easing in US-China trade friction. Last week we managed to climb the wall of worry… Fed, rates, oil, midterms, AI regulation. Usually when the market gets that gloomy and…