--- title: "Goldman Sachs hedge fund chief: The market environment is \"almost unprecedented,\" and the stock market underestimates downside tail risks" type: "News" locale: "en" url: "https://longbridge.com/en/news/279441147.md" description: "Goldman Sachs hedge fund manager Tony Pasquariello warned that the current downside risk in the U.S. stock market is severely underestimated, and market volatility is unusually calm, which requires vigilance. He pointed out that disruptions in oil and gas supply are a major threat, and if supply delays occur, Brent crude oil prices could rise. Although Goldman Sachs maintains an optimistic outlook for the year-end target price of the S&P 500, it advises investors to adopt defensive strategies, simplify their portfolios, and increase cash allocations. Historical data shows that the potential destructive power of oil price shocks on the market should not be overlooked" datetime: "2026-03-17T13:21:39.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/279441147.md) - [en](https://longbridge.com/en/news/279441147.md) - [zh-HK](https://longbridge.com/zh-HK/news/279441147.md) --- > Supported Languages: [简体中文](https://longbridge.com/zh-CN/news/279441147.md) | [繁體中文](https://longbridge.com/zh-HK/news/279441147.md) # Goldman Sachs hedge fund chief: The market environment is "almost unprecedented," and the stock market underestimates downside tail risks Market turmoil intensifies, with multiple pressures fermenting simultaneously. Tony Pasquariello, head of Goldman Sachs' hedge fund business, recently issued a warning that **the current downside risk in U.S. stocks is severely underestimated, and the volatility indicators are unusually calm, which is a divergence worth noting.** Pasquariello pointed out that **the ongoing disruption in oil and gas supply is the most pressing market threat at present**. Goldman Sachs' baseline scenario assumes that supply constraints will gradually recover after 21 days; if this holds true, the average price of Brent crude oil in March-April will reach $98, before falling back to $71 within the year. However, the 21-day window will expire this Saturday, and the risk of delays is clearly on the rise. He stated, "Time is the enemy in this equation; the longer it drags on, the worse the trade-off between growth and inflation becomes." Despite Goldman Sachs maintaining an overall optimistic forecast with a year-end target of 7600 points for the S&P 500 (corresponding to 12% earnings growth), Pasquariello still clearly recommends adopting a defensive posture: **"Simplifying the investment portfolio and moderately increasing cash holdings" is a reasonable move in the current environment.** ## Under the calm surface of the market, downside risks are underestimated Despite geopolitical conflicts lasting for two weeks, the U.S. stock market has shown an unexpectedly calm demeanor. Tony Pasquariello recently warned that **the current readings of VIX futures for longer maturities are below historical levels, the changes in the options volatility surface are limited, and a broader group of investors still maintains a high-risk exposure, which is a divergence that warrants significant caution.** "The market is certainly smarter than I am, but I am surprised that market participants are not exhibiting more concern," Pasquariello wrote in his latest report. He believes that **the most likely explanation for the market not experiencing a larger decline is that investors are betting on a swift resolution to the conflict.** "Victory could be announced at any moment, and this may be the scenario currently discounted by the market." Meanwhile, the resilience of the U.S. economic growth also provides support for the market. ## Historical data reveals the potential destructiveness of oil price shocks Goldman Sachs' systematic study of historical oil price supply shocks reveals undeniable patterns: **During periods of rising oil prices, the S&P 500 averages a decline of 12%; while over the entire cycle of oil price shocks, the total average decline of the index reaches 23%.** Pasquariello also cited judgments from frontline professionals in the commodity supply chain, stating that these "professionals with deep knowledge of the relevant markets" currently hold the most pessimistic views—although he acknowledged that this is merely an informal observation. He also reminded that the current trading environment can create bidirectional gaps, and investors should expect rapid rebounds to occur along the downward path. ## Macroeconomic narrative shifts dramatically, and expectations for policy easing are repriced Currently, the macro policy narrative is rapidly switching. In just a few days, the market has significantly repriced: **interest rate cut expectations have been significantly compressed, inflation risks have returned to the spotlight, forming the strongest policy tightening shock since 2023.** Goldman Sachs' Bobby Molavi previously described the recent chaotic state of the market: over the past few weeks, the asset management industry has experienced a cycle of calm, panic, pain, hope, and fear. Whether public or private, systematic or fundamental, hedge funds or long-only funds, all face unprecedented navigation difficulties. Cross-asset correlations and volatility are undergoing structural changes at an extremely fast pace, and the penetration of geopolitical and macro factors into economic fundamentals exceeds that of any previous period. Risk Warning and Disclaimer The market carries risks, and investment requires caution. This article does not constitute personal investment advice and does not take into account the specific investment goals, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article align with their specific circumstances. Investment based on this is at one's own risk ### Related Stocks - [VanEck Oil Refiners ETF (CRAK.US)](https://longbridge.com/en/quote/CRAK.US.md) - [Stt Strt®SPDR®S&P®Oil &GasEqpmnt&SvcsETF (XES.US)](https://longbridge.com/en/quote/XES.US.md) - [GOLDMAN SACHS GROUP INC DEP REP 1/1000TH PRF D (GS-D.US)](https://longbridge.com/en/quote/GS-D.US.md) - [The Goldman Sachs Group, Inc. 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