Goldman Sachs trader: The US stock market is like in 1999, all trading liquidity, who still cares about fundamentals, people feel that "money is depreciating, it's better to spend it than to hold it"
Goldman Sachs traders believe that despite recession alarms flashing, the market is entering a liquidity-driven speculative phase. The current U.S. stock market is similar to that of 1999, with investment logic shifting from fundamentals to liquidity, market positioning, and price trends. Consumers even have a mindset of "currency depreciation, better to spend than hold," and market sentiment is shifting from fear to "fear of missing out" (FOMO)
“Currency is depreciating, it's better to spend than to hold” — When this mentality begins to spread, the logic of trading in the U.S. stock market also changes.
According to news from the Chasing Wind Trading Desk, Goldman Sachs traders released the latest market insight report on September 21, stating that the current U.S. stock market environment is strikingly similar to the internet bubble period of 1999, with the market entering a liquidity-driven speculative phase.
Despite Moody's recession model flashing red lights — with a 48% probability of recession in the next 12 months — market participants seem to have cast fundamentals aside, fully immersing themselves in a liquidity-driven frenzy. Goldman Sachs traders even predict: “In the next 3 to 6 months, the economy and the market will ‘surge violently’.”
“We are no longer trading fundamentals,” the report bluntly states, “we are trading liquidity, positions, and market trends.”
Is 1999 Repeating? Fundamentals Have Taken a Backseat
“We have been here before,” the Goldman Sachs trader wrote, “think back to 1999, after the sell-off in August 1998, the Federal Reserve's market rescue completely reversed the market narrative, and the market became a slave to price movements.” He believes that today's situation is no different: what matters is no longer the fundamentals, but market positions and price behavior itself.
On one hand, contradictory signals in the economy do exist. Cyclical industries sensitive to interest rates, such as freight, automotive, chemicals, and real estate, are showing signs of recession pressure. On the other hand, sectors like services, healthcare, technology, defense, and artificial intelligence are still expanding. More importantly, American consumers' willingness to spend is exceptionally strong.
The trader specifically mentioned a prevalent market mentality: “There is a feeling that since money is constantly depreciating, it's better to spend it than to hold it.” This notion, combined with American consumers' unprecedented high exposure to the stock market, forms a strong underlying momentum for the market.
Liquidity and “FOMO” Emotion Dominate
Based on observations of market sentiment, this trader presented his core judgment. He pointed out that as the risk events from the Federal Reserve have passed, the protective positions previously used for hedging are being unwound, and this unwinding itself provides fuel for the market's rise.
“The market risk is shifting from fear to ‘fear of missing out’ (FOMO),” he wrote. Based on this shift in sentiment, he provided a very clear short-term forecast: “In the next 3-6 months: the economy will rise (rips), and the market will surge violently (rally hard).”
How to Trade This “Frenzy”?
In the view of Goldman Sachs traders, the most effective strategy right now is to embrace risk, specifically divided into two levels:
First, in the stock market, engage in “growth vs value” or “junk vs quality” pair trading. This means considering going long on the Nasdaq 100 Index (NDX) or ARKK fund while shorting the Russell 2000 Index (RTY) or quality value stock funds like GVIP.
“When ARKK performs well, it’s the era of junk stocks. This trend has just begun.”
Secondly, on a macro level, betting on a steepening yield curve. He specifically mentioned the "2s30s steepener" trade, which involves going long on the spread between 2-year and 30-year government bonds. He explained that this strategy could be profitable regardless of whether the economy strengthens or weakens.
Loose financial conditions are the driving force behind it
Why can the market ignore recession signals? The core lies in one word: liquidity.
The trader analyzed that this is a trade driven by financial conditions. The Federal Reserve is cutting interest rates during a cyclical upswing, combined with fiscal stimulus, providing a lot of "ammunition" for corporate buybacks. From the perspective of the interest rate market, front-end yields (such as the 2-year government bond yield) are no longer sensitive to better-than-expected economic data, indicating that the market expects interest rates to be firmly controlled.
He believes that the market has escaped the so-called "rolling recession" and is starting a rise driven by financial conditions. As liquidity taps are loosened, risk appetite will naturally shift: from high-quality assets to junk assets, from fundamental investing to pure speculation.
The real risk lies in the recession of artificial intelligence—capital expenditures of mega-scale companies, such as Amazon, Google, META, Microsoft, and Oracle, will determine whether AI continues to develop or stagnates.
The above exciting content comes from [Chasing Wind Trading Platform](https://mp.weixin.qq.com/s/uua05g5qk-N2J7h91pyqxQ).For more detailed interpretations, including real-time analysis and frontline research, please join the【 [Chasing Wind Trading Platform ▪ Annual Membership](https://wallstreetcn.com/shop/item/1000309)】[](https://wallstreetcn.com/shop/item/1000309)