Goldman Sachs Partner John Flood Talks Selloff, Stocks Dip

Summary

Podcast Summary: Goldman Sachs Partner John Flood Talks Selloff, Stocks Dip

Podcast: Bloomberg Talks
Host: Bloomberg (with Karen Mosk Gal, Nathan Hager)
Guest: John Flood, Partner, Goldman Sachs, Head of America's Equities Execution Services
Other Guest: Natalia Kenny Javich, Bloomberg News Equities Reporter
Date: June 5, 2026

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Episode Overview

This episode centers on the recent halt in Wall Street’s rally, the day’s market selloff, and what it all means for both institutional and retail investors. The conversation features John Flood of Goldman Sachs and Bloomberg’s Natalia Kenny Javich, probing the robustness of current equity markets, investor sentiment amidst high valuations, and the outlook for upcoming IPOs and future market direction.

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Key Discussion Points and Insights

1. Market Selloff and End of Rally Streak

• The episode opens amid a market down day, interpreted as a possible breather after a historic run of weekly gains. This pause is fueled by a strong jobs report, sparking speculation about the Federal Reserve’s next move—potentially a rate hike.
  • “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.” – Nathan Hager (00:34)

2. Mega Cap Tech Equity Offerings and Market Health

• Discussion on new equity raises from major tech companies (e.g., $85B Meta Platforms share sale after a major Google deal) is highlighted as indicative of market health and strong demand.
  • John Flood: “Signal tells me that it's a very healthy market right now in terms of the supply and demand that's out there … there's never been more robust demand for these offerings. And my expectation is that trend continues.” (01:37)
• Despite reaching a record number of S&P 500 all-time highs, Flood is constructive on the equity market with expectations for more gains.

3. Is the Rally Just FOMO or Is There Real Underpinning?

• Karen raises concerns about momentum and whether institutional demand is just FOMO.
  • Flood asserts institutional discipline remains, illustrated by high gross hedge fund exposure—but also an unprecedented amount of macro product short hedging, signaling ongoing skepticism.
  • “It's essentially the most hedged we've ever seen. Hedge fund clients at Goldman Sachs on the equity floor.” – John Flood (02:40)

4. Today’s Selloff: Profit Taking or Buying Opportunity?

• Natalia asks if the day's dip is an entry point or cause for caution.
  • Flood: “Yes, when you have a 2% sell off in the S&P 500, it has paid to buy those dips and I think that will continue.” (03:48)
  • He cites persistent market “walls of worry” (inflation, geopolitics, private credit) and plenty of cash on the sidelines—signs of a market not yet overextended.

5. Positioning Indicators: Room for Further Gains?

• Goldman’s positioning data shows that, despite the index being near highs, investor positioning remains neutral, not extreme.
  • Flood: “Despite us being close to all time highs at the index level … there is still concern out there. … When you look at hedge fund exposure, you look at mutual fund cash, there's still plenty of skepticism left out there. That's why our sentiment indicator is showing healthy positioning, not overextended positioning.” (05:13)

6. Retail vs. Institutional Investor Behavior

• Flood points to a slight disconnect between cautious institutions and enthusiastic retail buyers.
  • Retail involvement persists unless there is job loss—historically, a significant pullback only came during the COVID-19 crisis.
  • “Once retail starts buying, they don't really stop unless there is true job loss… until we start to see job destruction, that retail bid will likely remain a healthy, a healthy constant in the marketplace.” (06:29)

7. What Could Upend the Rally?

• Apart from job losses, the other major trigger for concern would be broad-based disappointment in earnings.
  • “If you start to see earnings holistically across the S&P 500 disappoint, that would be highly concerning to me. We haven't seen any evidence of that.” – John Flood (07:41)

8. Role and Behavior of Systematic Funds (CTAs)

• Systematic funds are now relatively full in S&P 500 exposure; their buying momentum has plateaued.
  • “If we do take a turn lower, … you will see that CTA community start to sell the equity market. That being said, the systematic positioning in the marketplace is very small relative to retail, relative to corporates, relative to hedge funds, asset managers, sovereign wealth funds.” – John Flood (08:29)
  • Natalia adds that when CTAs do sell, the effect is felt quickly due to their fast, technical approach.

9. Are Stocks Overpriced Going Into Earnings Season?

• Despite elevated valuations, Flood does not see the market as “overly expensive.”
  • “We don't think it's overly expensive … there is still, you know, there's still real value to find. Even though some of these markets appear to have gone up into the right, there's still room to run because the fundamentals back it.” (09:40)

10. Do Big Tech IPOs Signal a Market Top?

• With many major IPOs on the horizon (Cerebras, SpaceX, Anthropic), Karen asks if these are signs of a top or justified optimism.
  • Flood: “As of right now, we still think that fundamentals justify what we're seeing go on in the equity market. … We think these dips are buying opportunities. And, and we think that there's a clear path to 8,000 and beyond this year.” (10:46)
  • “Wow.” – Karen Mosk Gal (11:04)

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Notable Quotes & Memorable Moments

• On Market Demand and IPO Activity:

  • “There's never been more robust demand for these offerings. … We expect more [all-time highs] to come in the future.” – John Flood (01:37)

• On Hedge Fund Caution:

  • “It's essentially the most hedged we've ever seen. Hedge fund clients at Goldman Sachs on the equity floor.” – John Flood (02:40)

• On Dip Buying:

  • “Yes, when you have a 2% sell off in the S&P 500, it has paid to buy those dips and I think that will continue.” – John Flood (03:48)

• On Sentiment:

  • “That's why our sentiment indicator is showing healthy positioning, not overextended positioning.” – John Flood (05:13)

• On Retail Flows:

  • “Once retail starts buying, they don't really stop unless there is true job loss.” – John Flood (06:29)

• On What Would Change His Outlook:

  • “If you start to see earnings holistically across the S&P 500 disappoint, that would be highly concerning to me.” – John Flood (07:41)

• On Systematic Funds:

  • “The highest velocity of buying is behind us. … Systematic positioning … is very small relative to retail, corporates, hedge funds.” – John Flood (08:29)

• On Valuation:

  • “We don't think it's overly expensive… there's still real value to find.” – John Flood (09:40)

• On S&P 500 Outlook:

  • “We think these dips are buying opportunities. … There's a clear path to 8,000 and beyond this year.” – John Flood (10:46)

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Timeline of Important Segments

• End of rally and jobs numbers backdrop (00:20–00:46)
• Mega-cap equity deals and interpretation (01:04–01:37)
• Momentum vs. discipline; Hedge fund caution (02:10–02:40)
• Selloff: buying opportunity? (03:27–03:48)
• Positioning/sentiment among funds (04:46–05:55)
• Retail investor role and risks (05:55–06:29)
• Earnings risk and what could reverse the rally (07:29–07:41)
• Systematic funds (CTAs) and market impact (08:08–09:20)
• Valuation and market pricing ahead of earnings (09:25–09:40)
• Are big IPOs a top signal? (10:21–10:46)
• Closing and summary outlook (11:04)

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Conclusion

John Flood’s insights paint a picture of a resilient and disciplined equity market, with robust institutional demand and persistent retail participation, despite fears around inflation, geopolitics, and potential Fed tightening. Skepticism among pros, healthy cash balances, and only moderate investor positioning suggest that the market still has room to run. Despite some headline-making IPOs, Flood sees no evidence of bubble behavior, and remains bullish on equities, forecasting the S&P 500 could reach or exceed 8,000 this year if fundamentals persist.

Tone: Professional, analytical, occasionally optimistic yet grounded—reflecting both Bloomberg's and Goldman Sachs’ financial expertise.

Transcript

[Indiana University Announcer]

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[Karen Mosk Gal]

Bloomberg Audio Studios Podcasts Radio news 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 trade today, Tim, or at least a little bit of a breather.

[John Flood]

Yeah.

[Nathan Hager]

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.

[Karen Mosk Gal]

All right, so let's get into the trade now that we know what the backdrop is right now. Natalia Kenny Javich is with us, Bloomberg News equities reporter. She's back at home base 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.

[Nathan Hager]

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 metal 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]

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, you know, 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, you know, 24 all time highs. We expect more of that to come in the future.

[Karen Mosk Gal]

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 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 air space saying demand is incredible. They just, just 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]

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 exposed names. There are 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 be, 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 Kenny Javich]

John, what is your take actually on today's stock market sell off? Because we hear lots of conversations about some market participants, you know, 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]

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 has 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, you know, has moved, has rates moving higher and people now think that we will get a rate hike and by year end. So it is, I think it's healthy. I do think it's a buying opportunity and I think that there is still a significant amount of worry, cash on the sidelines, short exposure out there for, for the market to climb higher.

[Natalia Kenny Javich]

Got it. You know, I also wanted to ask you about one indicator tracked by Goldman Sachs. It basically tracks all positioning across hedge funds, long only investors, retail funds, it is interesting because the stock market is at all time high. At the same time positioning is still at the neutral level, which means that there is more room to run. So first of all, please tell me why is that, why positioning is still so low and what it means for the stock market direction.

[John Flood]

It's likely a tailwind and that's exactly what we said. Despite us being close to all time highs at the index level from an institutional investor perspective, there is still concern out there. We see that through gross exposure being at all time high, expressed through a lot of short hedges in macro product and from mutual fund cash balances. If you look at notional dollars that remain on the sidelines for mutual funds, we are still at, you know, we're still at a long term average. It's not like there's, it's not an outlier. So when you look at hedge fund exposure, you look at mutual fund cash, there's still plenty of skepticism left out there. That's why our sentiment indicator is showing healthy positioning, not overextended positioning.

[Karen Mosk Gal]

John, that makes me happy that there's some negative sentiment out there. I get very nervous. You know, we're just at this tech event we talked a lot about. I10 of Broadcom was here, I mean all of the major players and there was a lot of enthusiasm. I think it's safe to say with some cautiousness, but a lot of enthusiasm. Having said that, because of what you are seeing, particularly among institutional investors and hedge funds, do you think the retail investor in markets overall are not really thinking that we could see some kind of pullback or mini correction as a result?

[John Flood]

I think that there is a slight disconnect between the retail investor right now and the institutional investor. That being said, I think that retail will continue to buy the equity market as we have some mega cap IPOs likely in the pipeline between now and year end. We'll see how that plays out. But these are high profile companies that typically grab the attention of retail. And once retail stops, starts buying, they don't really stop unless there is true job loss. Our data shows that that retail bid disappears when there is job loss. And the last time that we saw retail as a net sale seller of the US equity market for more than a consecutive week was back in March of 2020 during the depths of COVID So really like you have to watch the, you have to watch employment, you have to watch jobs. And until we start to see job destruction, destruction, that retail bid will likely remain a healthy, a healthy constant in the marketplace.

[Nathan Hager]

Well, we certainly got A positive print today in that arena, John. I'm wondering though, what would give you pause apart from job losses? What would, what would give you pause with an equity rally such as this?

[John Flood]

If we started to get disappointed in earnings and frankly, we continue to see companies clear these hurdles. Last quarter earnings were solid. We are optimistic about next quarter. If you start to see earnings holistically across the S&P 500 disappoint, that would be highly concerning to me. We haven't seen any evidence of that. We aren't bracing for any evidence of that in the near term.

[Natalia Kenny Javich]

I have to ask you, John, about systematic funds because as we remember in March this market was really driven by technical factors. What does your data tell us right now about how positioning look like, looks like across CTAs well control funds? And what does it mean again for the stock market direction?

[John Flood]

Systematic funds have had a solid year of performance and right now they are relatively full in terms of S&P 500 exposure. This is an incredibly momentum driven community. And right now, as the market moves higher, they will continue to add. That being said, the highest velocity of buying is behind us. If we do take a turn lower, you know, have several more days of what we're going through today, you will see that CTA community start to sell the equity market. That being said, the systematic positioning in the marketplace is very small relative to retail, relative to corporates, relative to hedge funds, asset managers, sovereign wealth funds. So that would be one noteworthy piece of supply. We think all the other sleeves of demand outweigh that in a move lower.

[Natalia Kenny Javich]

I agree. But at the same time, when they sell, you really feel it because they do it so quickly.

[John Flood]

Correct.

[Natalia Kenny Javich]

So again, regarding today's sell off, we see that The S&P 500 basically is now trading P E ratio closer to long term average. So do you feel that the market right now is fairly priced in ahead of the next earnings season?

[John Flood]

We don't think it's overly expensive. We get this question in terms of, you know, are we optimistic on earnings? Yes, we get this question within memory space all the time. And we still think memory, one of the highest momentum sleeves of the market right now, is still relatively fairly priced. And we see that with our institutional clients right now. There's a ton of focus in Korea, in Taiwan, Taiwan outside of the US and it's. There is still, you know, there's still real value to find. Even though some of these markets appear to have gone up into the right, there's still room to run because the fundamentals back it hey, John, just.

[Karen Mosk Gal]

Oh, gosh, go ahead.

[Natalia Kenny Javich]

No, please, go ahead, Carol. Hey.

[Karen Mosk Gal]

Well, I've just got to ask John. We just got about 30, 40 seconds. We obviously want like an hour with you because this is all come back. Incredible. The ipo, cerebras, ipo, that was the biggest we're getting ready for the space X ipo, anthropic ipo. Just watching. I know you can't talk specifics, but does any of this smell a little bit like a top of the market or does it all feel justified and fundamentally justified? And again, just got about 30 seconds.

[John Flood]

As of right now, we still think that fundamentals justify what we're seeing go on in the equity market. So yes, like we are constructive on our desk. We think S&P 500, we think these dips are buying opportunities. And, and we think that there's a clear path to 8,000 and beyond this year.

[Karen Mosk Gal]

Wow. All right, John Flood, thank you so much. Goldman Sachs partner, head of America's Equities Execution Services. I hope you will grace us with coming back again. And joining us, Natalia, Katie Jevic, of course, too, and really appreciate it. She is Bloomberg News equities reporter back there at Bloomberg headquarters.

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