GS TWIG Notes This Week in Global Research August 21, 2026

Equity Research 21 August 2026 | 12:33PM EDT

GS TWIG Notes: This Week in Global Research - August 21, 2026

Chris Hussey | Goldman Sachs & Co. LLC

Sarah Herr | Goldman Sachs & Co. LLC

macro issues we’re watching Sluggish growth & employment + low inflation = no hikes n Jan Hatzius reiterates our view that the Fed is very unlikely to hike rates at its September meeting or even again in this cycle in “They’re Not Hiking.” Why? Growth is slowing. Look for 2H26 real spending growth to slow to 1-1.5% as the stimulus from tax cuts wanes. See also Ronnie Walker’s “Earnings Season Takeaways: Consumer Strength Before the Slowdown” and Megan Peters’ “G10 Consumer Dashboard: July 2026: Spending Starts to Slow.” The labor market may be worse than it looks. Underlying job growth is only 5K per month now and the 40bp drop in the unemployment rate we have seen this year is a product of a dwindling population of job seekers and not the result of more people finding work. AND core inflation is hard to find. Rising fuel prices are putting pressure on some consumers, but outside of energy prices, inflation is well contained. n Digging further into evolving Fed policy, Allison Nathan sits down with a slew of experts to discuss whether less transparency from the central bank is good or bad for monetary policy and/or markets in “Assessing a less transparent Fed.” Bottom-line: reduced transparency leads to increased market volatility, but the question of whether this just increases the market’s noise or also improves the market’s signal remains. See also Friedrich Schaper’s note on the US Treasury in “Fed Communication And Term Premium” and Joseph Briggs’ note exploring central bank transparency across the world in “What Has the World Learned About Central Bank Communication?.” See also Lina Thomas’ latest note on gold, “Gold and Central Banks: Storage Dilemma; Buying Trend Picks Up” and Stuart Jenkins FX note, “Finding Factors in FX Markets.”

Focus on: labor n Global AI-related hiring headwinds still appear confined to a narrow set of industries and workers writes Sarah Dong in “Is AI Impacting Global Labor

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Markets?” Overall, most developed markets are adopting AI at the same pace — around 20% of companies have embraced the new technology. But we find little evidence that AI is leading to lower employment, yet. Separately in Germany, rising real wages amid stagnant productivity have weighed on employment writes Niklas Garnadt in “Germany—A Cyclically Loose but Structurally Tighter Labour Market.” Looking ahead, an aging workforce coupled with immigration control should drive a 0.4% annual contraction in labor supply over the next decade – a drag on growth but not necessarily the unemployment rate.

Positioning corner: a rough July for some, but that may have cleaned us up for a better forward n Ben Snider and Ryan Hammond update our quarterly positioning analysis across both hedge funds and mutual funds in two notes this week, “Hedge Fund Trend Monitor: Down but not out” and “Mutual Fundamentals: Rebalancing act.” Hedge Funds had a strong 2Q, but then struggled as AI momentum unwound in July. Our Hedge Fund VIP list of the most popular long positions suffered its worst 1-month underperformance vs. the S&P 500 in more than 20 years of history, and July marked one of the sharpest hedge fund de-grossing episodes of the past decade. The good news: US equity long/short hedge funds have returned 10% through mid-August and the crowding we saw in 2Q is much less pronounced post-July’s sell-off. As for Mutual Funds, more funds than usual (41% vs. 37% on average) are outperforming their benchmarks somewhat helped, perhaps, by an inability…