Goldman Sachs Partner Warns: Markets Are All Greed, No Fear

Goldman Sachs partner Mark Wilson noted a notable shift in daily routines in his latest weekly report. He used to start each day with headlines about the Middle East; now, he checks SK Hynix’s share price first.

This small change reflects the dominant market trend: AI computing investment has overtaken geopolitical risks and become the core driver of asset pricing. Still, Wilson issued a warning that market sentiment has reached an extreme state — all greed, no fear.

He outlined three technical signals pointing to overheating risks.

l Extreme bullish sentiment The U.S. stock options put/call ratio sits near historic extremes. The five-day drawdown gap between large-cap tech stocks and Goldman Sachs’ basket of unprofitable tech names has matched or surpassed levels seen during the 2021 market frenzy.

l Surge in leveraged capital Assets under management of 2x+ single-stock leveraged ETFs have jumped sharply, with capital heavily concentrated in memory chip stocks.

l Record-high momentum exposure Current positioning for momentum strategies has hit an all-time peak.

The rally is not entirely unsupported by fundamentals.S&P 500 has climbed around 10% year-to-date;EPS estimates have upgraded by roughly 15%;The index’s P/E ratio has contracted by 4%

A critical caveat emerges: S&P 500 EPS forecasts show almost no growth if AI infrastructure and energy sectors are excluded. The entire market rally hinges on one single theme.

Conditions are gradually forming for the market to break away from this narrow focus.

· Policy: New Fed Chair Kevin Walsh has just taken office. Historically, most Fed chairs have seen market pullbacks in their first year.

· Earnings: EPS growth is expected to slow after summer.

· Geopolitics: A framework for the Iran ceasefire has been established.

Once the ceasefire deal is finalized, lower crude prices will drag down Treasury yields and the U.S. dollar, and loosen global financial conditions. Europe and emerging markets will see greater relative gains. As a region short of energy independence, Europe stands as one of the biggest beneficiaries of de-escalation.

Wilson’s warning is straightforward. Though the AI rally has fundamental support, sentiment indicators, leverage and momentum exposure are all at historic extremes. A seamless market transition depends on Fed policies under Walsh and geopolitical developments. The current market euphoria is approaching a turning point.