As the big dynamics in the game have changed, so has risk/reward, warns Goldman Sachs head of hedge fund coverage, Tony Pasquariello, in his latest note to clients after a "wild week in the saddle."

i. the trading environment remains highly fluid, with no abatement of headline roulette, and a “period of transition” leaves stock operators wondering which end is up.

ii. the flow of news in the US -- both micro and macro -- was mixed, but all taken together it failed to ease concerns around a worsening of the growth/inflation tradeoff.

iii. the consequences are obvious: S&P is down four straight weeks and has recorded the sharpest short-cycle selloff since the depths of COVID.

iv. along the way, US equities have been sold, hard and fast -- it’s clear from our franchise flows that the trading community has already shed a lot of length (both discretionary and non-discretionary actors).

v. in turn, volumes have been very high, and the options market reveals investor stress -- the VIX approached 30 early in the week and term structure remains inverted.

A humble view on where this leads: