Goldman Sachs Partner John Flood Talks Selloff, Stocks Dip

**SPEAKER_1** (0:02)
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**Carol Massar** (0:07)
As you know, trading news, a lot of things keep us honest, and all bullish things must come to an end. We're certainly seeing that in the trade today, Tim, or at least a little bit of a breather.

**Tim Stenovec** (0:16)
Yeah, as we've been reporting, as you just heard from Charlie, Wall Street's historic weekly run poised to come to a halt, stocks and bonds falling after that solid jobs report added to speculation that the Fed's next interest rate move could actually be a hike.

**Carol Massar** (0:29)
All right, so let's get into the trade now that we know what the backdrop is right now. Natalia Kniazhevich is with us, Bloomberg News' equities reporter. She's back at Homebase at Bloomberg Headquarters in New York City along with John Flood. He's Goldman Sachs' partner and head of America's equities execution services, as we said, both back in New York City.

**Tim Stenovec** (0:46)
Hey John, Natalia, good to have you both with us. John, I just want to get your thoughts on where we are in maybe a cycle here. And I'm struck by the news of meta platform shares down right now, the company weighing a big equity raise. After that blockbuster Google deal that we got earlier this week, $85 billion in a share sale. John, I know I'm not going to get you to comment on an individual company, but comment on what it means to you when you have huge mega cap tech companies doing share sales or possibly doing share sales like this. What signal does it tell you?

**John Flood** (1:19)
Signal tells me that it's a very healthy market right now in terms of the supply and demand that's out there in the marketplace. And I think that we've seen, I speak with institutions at Goldman Sachs, institutional investors, and there's never been more robust demand for these offerings. And my expectation is that trend continues.
And that's a major piece of why we are very constructive. This equity market, despite S&P 500 already making 24 all-time highs, we expect more of that to come in the future.

**Carol Massar** (1:52)
So John, how do we know though that it isn't just a case of FOMO and people just chasing, I mean, it's so much money, so much momentum in terms of the AI spend and build, debt side, equity, tapping markets. We heard from the Bloomberg Technology folks yesterday, a big conference, lots of major players in the AI space saying, demand is incredible, they adjust the momentum. How do we know though, that it's not just kind of a major, major FOMO trade and that there's going to be some kind of reality or reckoning coming in the near future?

**John Flood** (2:22)
Because from the institutional investor perspective, we actually still see a lot of discipline out there. There's still, I think, a wall of worry left to climb higher in this market. What we look at is our prime brokerage data. And one of the most important pieces out there right now, I think, is gross exposure. So essentially, hedge funds are still long. A lot of their single stocks, AI tech expose names.
They're also more short macro products against these longs than they ever have been in the history of our data set. What that tells me is there's still healthy skepticism about what is going to happen next.
I want to hold my longs, but I want to make sure I'm hedged. And it's essentially the most hedged we've ever seen hedge fund clients at Goldman Sachs on the equity floor.

**Natalia Kniazhevich** (3:10)
John, what is your take actually on today's stock market sell-off? Because we hear lots of conversations about some market participants taking profits off the table because they're prepping for this huge wave of big tech IPOs.
So, what is your take? And what does Goldman also think? Is it a buying opportunity? Is it time to buy the dip?

**John Flood** (3:30)
I think that there have been few and far dips to buy so far this year.
So yes, when you have a 2% sell-off in the S&P 500, it is paid to buy those dips. And I think it continue, and I think that will continue. I think today you have some profit taking into the weekend ahead of what is likely going to be continued supply as evidenced by the news that just broke. But really, we had a strong jobs print this morning. And I would say, what are the fears that people continue to list as top concerns? It's inflation, it's Iran, it's private credit. And this morning's jobs print has rates moving higher. And people now think that we will get a rate hike and buy year end. So I think it's healthy. I do think it's a buying opportunity.