US Stock Futures Dive Further

Goldman Sachs’ trading team noted that US equities have recently experienced sharp momentum pullbacks and position liquidation, with the deleveraging process likely in its late stages, though substantive risk reduction has not yet been completed. Global total leverage remains at the 93rd percentile of the past five years, and events such as geopolitical tensions, Federal Reserve policy, and earnings season may continue to keep market volatility high. Goldman Sachs expects US stocks’ upside in August will be constrained by seasonal fund outflows, insufficient institutional risk appetite, and dealer positive Gamma positions, with the market likely to trade in a range in the short term. If the market continues to decline, systematic strategies like CTAs may ramp up selling pressure; the estimated sell size in a downside scenario over the next week is $24.9 billion, far exceeding the ~$2.3 billion buy size in an upside scenario. Corporate buybacks will serve as the most stable buying support in the near term. Currently, about 31% of S&P 500 constituents are in their buyback open windows, a proportion projected to exceed 90% by mid-August. However, as individual stock-index correlation rises, the extreme risk of synchronized market sell-offs is increasing. Goldman Sachs advises investors to proactively purchase protective positions, including going long on market correlation, buying three-month put options on the Russell 2000 ETF, and allocating short-term option protection for retail-favored stocks. Current hedging costs remain reasonable, making them suitable for hedging further market downside risks.

According to an official announcement, Coinbase will launch Brent crude oil and WTI crude oil perpetual contracts. Trading for the BRENTOIL-PERP and WTIOIL-PERP perpetual contract markets will open at or after 17:00 Beijing Time on August 3.

Citrini stated that initial investors in 25-year-old AI stock prodigy Leopold Aschenbrenner’s AI-themed hedge fund Situational Awareness backed the fund not just for its exposure to AI, but for Aschenbrenner’s judgment on AI’s development trajectory and the fund’s strategy of concentrated long positions in high-beta AI assets. Since its launch in 2024, the fund once posted returns of around 2200%, but recently suffered a sharp pullback amid declines in related stocks. Citrini noted that such AI-devoted investors are unlikely to turn bearish on AI solely because SK Hynix’s stock halved in six weeks. Even if an investor put $100 million into the fund at its inception and lost 90% of their assets in July, their holdings would still be worth roughly $230 million, thanks to the cumulative 2200% return. Citrini expects existing investors may continue buying the dip, and Situational Awareness is likely to secure the new capital it’s seeking. After fundraising is completed, the fund may unwind some short-term hedges and allocate the new capital to what it terms “the best buying opportunity since April 2025”; market makers that sold hedging instruments may also cover their related hedge positions simultaneously. Leopold is not necessarily in trouble; instead, he could potentially push AI stocks to form a temporary bottom through fundraising, hedge unwinding, and repurchases. However, if these AI-devoted investors, who still hold large unrealized gains, refuse to add positions on dips, related stocks may continue to fall sharply.

Goldman Sachs’ report shows that Asian-focused equity hedge funds are facing their largest single-month drawdown on record, driven by a broad sell-off in AI-related stocks that has erased most gains from earlier concentrated bets on the sector. As of July 28, the average decline for Asian-focused fundamental long-short equity hedge funds stood at 18.6% for the month. In the first half of this year, these funds became among the world’s best performers thanks to early bets on AI hardware leaders including South Korean chipmakers SK Hynix and Samsung Electronics, with some posting returns exceeding 100%. However, the market has since seen a sharp reversal. Goldman Sachs noted that since hitting a year-to-date peak return of 40% on July 22, these funds have given back 21 percentage points of their YTD gains. The crowded AI trades that fueled the funds’ sharp rally in H1 are now the “key factor driving this month’s unusually large drawdown,” Goldman Sachs pointed out. Funds with higher AI exposure suffered heavier losses. Amid extreme market volatility, hedge funds have been locking in profits and reducing risk. Goldman Sachs data shows that as of July 27, Asian hedge funds have cut their exposures for eight consecutive trading days, with the “cumulative total exposure reduction over five days” hitting a record high. (Source: Jinshi)

According to market data from BIT (bit.com), most semiconductor stocks rose during Thursday’s pre-market trading in the US stock market. Lam Research (LRCX) gained 7.65%, Applied Materials (AMAT) rose 2.66%, ASML (ASML) climbed 2.08%, KLA (KLAC) advanced 1.97%, TSMC (TSM) increased 1.05%, and NVIDIA (NVDA) added 0.82%; Arm (ARM) fell 6.47% and Qualcomm (QCOM) dropped 5.50%. Optical communication concept stocks showed mixed performance: Nokia (NOK) rose 3.80%, Astera Labs (ALAB) gained 1.51%, Lumentum (LITE) advanced 0.61%, Corning (GLW) increased 0.60%, while Coherent (COHR) declined 1.16%.

Serenity released a statement saying that 25-year-old AI stock prodigy Leopold Aschenbrenner admitted his AI-themed hedge fund Situational Awareness was not immune to the recent market turmoil. Aschenbrenner described the current sell-off as potentially the best buying opportunity since early 2025. Serenity stated it shares this view and hopes Aschenbrenner can successfully complete fundraising, as many assets have likely fallen beyond reasonable levels amid forced deleveraging. Earlier reports noted that Leopold Aschenbrenner, a 25-year-old rising AI stock prodigy on Wall Street and former OpenAI researcher, founded the AI-themed hedge fund Situational Awareness, which is currently seeking new capital injections. Following a sharp correction in AI-related stocks recently, the fund—renowned for its high-concentration bets on the AI industrial chain—has suffered significant losses and is replenishing capital via communications with investors and potential asset sales.