Three reasons Goldman's co-head of global banking and markets says to stay invested — SkimNews
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- Ashok Varadhan, Goldman's co-head of global banking and markets, advised investors to "stay invested" on the firm's "The Markets" podcast, citing resilience against higher rates, elevated oil prices, and economic durability concerns.
- Varadhan expects the Fed to hold rates for the remainder of 2026, a view that runs against market pricing — after a disappointing Friday jobs report, CME FedWatch showed September hike odds at roughly 50% and October at 63%.
- Varadhan projects oil falling "well below $70 a barrel, maybe even lower" in the latter part of 2026, while West Texas Intermediate futures climbed back above $80 Monday as doubts grew over a US-Iran deal to reopen the Strait of Hormuz.
- Varadhan sees artificial intelligence as an eventual disinflationary force through productivity gains, though he acknowledged that the massive near-term infrastructure build-out needed to support AI can strain resources and add to inflation.
- Varadhan remains constructive on credit, arguing that economic resilience has kept spreads from widening dramatically despite heavy issuance and that realized defaults can stay "fairly low" if exogenous shocks fade.
- The S&P 500 has rallied back to a record high, bringing 2026 gains to more than 13%, providing the macro backdrop for Varadhan's bullish call.
Why it matters: Varadhan's three-pillar call directly contradicts where traders are positioned: CME FedWatch prices a 50%+ chance of a September hike while WTI trades above $80, roughly $10 above his year-end target that hinges on a US-Iran Strait of Hormuz deal. If he's right, investors who sold on rate-hike fears and energy spikes leave gains on the table, while credit holders keep collecting tight spreads backed by his low-default thesis.
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