The Yards Will Likely Be Harder From Here

Goldman Sachs' Tony Pasquariello notes that while strong earnings growth has powered the S&P 500 to a nine-week winning streak, full positioning and the difficulty of duplicating extreme EPS revisions suggest a tougher road ahead for bulls.

Key Takeaways

• 1.US equity returns in 2026 have been driven entirely by earnings growth (+27% y/y) rather than valuation expansion, with the P/E ratio actually contracting from 22x to 21x.
• 2.Market positioning is significantly elevated, reaching +8 on a scale of -10 to +10, characterized by high volumes in single-name call options and levered ETF expansion.
• 3.The 'tactical setup' is becoming saturated, making it unlikely that the market-cap expansion seen in the last two months will be repeated in the coming two months.

Table of Contents

• The first consideration is positioning
• The US Economy
• NDX
• Semis
• Calls
• Longs plus Shorts
• (North) Asia
• Japan
• Hedge funds
• Credit
• The money markets
• A final data point

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