Goldman Sachs co-head of global banking and markets Ashok Varadhan has made his Ashok Varadhan stay invested case publicly, and the three pillars holding it up are a Fed that stays on the sidelines, crude oil retreating well below $70 a barrel, and an economy increasingly powered by artificial intelligence.
Varadhan, who serves as co-head of global banking and markets at Goldman Sachs, laid out his views on the firm’s ‘The Markets’ podcast, recorded on 5 August 2026 with host Mike Washington on the Goldman Sachs equities trading floor. His message was unambiguous: ‘Stay invested would be my advice.’
Where Varadhan Parts Ways With the Market on Rates
The most pointed element of his argument is on interest rates. Varadhan does not expect the Federal Reserve to raise rates for the remainder of 2026, a view that cuts against where a meaningful slice of the market has been positioned.
The Fed’s footing gives him some cover. At its July 29 meeting, the Federal Open Market Committee voted 9-3 to hold the federal funds rate steady at 3.50%–3.75%, the fifth consecutive meeting at which the rate was left unchanged at that level. Three members dissented in favour of a hike, a detail that illustrates exactly the tension Varadhan is navigating.
Goldman’s own economics team forecasts the Fed will hold at that range through the end of 2026, with any cuts pushed into 2027, according to reporting by Yahoo Finance. That aligns with Varadhan’s read. ‘I don’t think we will see hikes in the latter part of this year,’ he said. ‘I think rates are going to stay on hold.’
Futures pricing, however, has not fully bought the argument. After a weaker-than-expected July jobs report, CME’s FedWatch tool showed roughly 55% odds of a hike in October and nearly 75% by December, even as the probability of a move in September fell back. The June FOMC dot plot had already signalled more hawkish intentions: most officials projected the benchmark rate would sit between 3.6% and 4.1% at year-end, up from their prior estimate of 3.25%–3.75%, according to the June meeting minutes. Varadhan’s call, in short, is a deliberate bet against that committee trajectory.
His reasoning centres on disinflation. Some of the forces that drove prices higher are retreating, he argued, including the pass-through from tariffs. A resolution of tensions around the Strait of Hormuz could ease energy costs further. And over a longer horizon, he sees AI as a deflationary force once the infrastructure required to run it is built out: the capital spending strain is inflationary now, but the productivity gains that follow should run in the other direction.
Oil and the Economy Complete the Ashok Varadhan Stay Invested Thesis
On oil, Varadhan was direct. ‘I think energy is going to go back down,’ he said. ‘I think oil settles back down well below $70 a barrel, maybe even lower once we get towards the latter part of the year.’ That view faces a near-term test: West Texas Intermediate futures climbed back above $80 per barrel on Monday as markets grew sceptical that a US-Iran agreement over Strait of Hormuz shipping traffic was imminent.
The third strand of his argument is economic durability. Despite repeated external shocks, underlying nominal growth has held up. Varadhan noted that if those pressures ease, the economy is positioned to keep expanding, with AI-driven productivity adding a further tailwind. That resilience also shapes his view on credit. Heavy issuance means investors should expect more compensation for risk, he acknowledged, but default rates can stay low if the economic backdrop holds. ‘If you think the exogenous shocks are going away and you still have the resilience of the economy,’ he said, expectations for realised defaults can remain ‘fairly low.’
The S&P 500 has already logged gains of more than 13% in 2026, returning to record highs. Worth noting: this is not a new position for Varadhan. The podcast transcript confirms he made the same stay invested call in the fourth quarter of the prior year. The question now is whether the Fed’s three dissenters, and the futures market pricing nearly even odds of a December hike, will eventually force a revision to that thesis or whether crude oil’s retreat does the Fed’s work for it first.
