Goldman Sachs: Middle East tension unresolved, speculators bet heavily on US stock market correction

Due to the lack of signs of easing tensions in the Middle East, speculators are increasing their bearish bets on the US stock market, believing that there will be greater losses in the future. According to data compiled by the main brokerage department under Goldman Sachs, as of the week ending March 6, hedge funds increased their short positions in stock exchange-traded funds (ETFs) by 8.3%. The data shows that in the past five years, hedge funds have only increased their short positions at this rate once. As the conflict in the Middle East escalates, concerns about soaring oil prices and inflation are increasing, leading to a decrease in demand for the US stock market by investors. The S&P 500 index fell 2% last week, and the Chicago Board Options Exchange Volatility Index (VIX) rose to its highest level since the tariff turmoil in April. However, short-term fund managers have not completely withdrawn from the US stock market. Hedge funds increased their holdings in individual stocks for the first time in five weeks. This indicates that fund managers are eager to find opportunities to buy low-priced stocks, while still remaining skeptical about the overall market. Goldman Sachs Managing Director Lee Coppersmith wrote in a report to clients on Saturday: "Position and fund flow data reinforce the view that investors are increasing their hedge positions, but not really reducing their holdings." On Friday, the S&P 500 index fell 1.3%, with 9 out of 11 industry sectors closing lower. Although the index fell by less than 4% from its all-time high point in January, Goldman Sachs' so-called US Volatility Fear Index soared to 9.72 (maximum 10). Goldman Sachs strategists believe that this deviation indicates a gap between the internal pressure at the individual stock level and the relatively mild decline in the overall index.