Diet Pills Hotter Than AI! US Essential Consumer Goods Suffer Record Shorting

The report shows that last week, consumer goods is the largest U.S. net short position in the sector, the size of short selling is four times the size of long buying, in the non-essential consumer goods sector underperforming the broader market, hedge funds sold the sector at the fastest pace in 11 weeks.
Short-selling flows into the consumer staples sector increased for the sixth consecutive week, with the nominal value of short-selling the largest in three months, exceeding 98% of the level over the past five years.

Nearly all segments of the Consumer Necessities sector saw net short selling in flows last week, led by Household Goods, Beverages and Food. While both gross and net exposure declined, both have a long way to go before turning long unless market sentiment reverses.

There are a number of factors contributing to the large shorting of essential consumer goods, such as high interest rates, declining inflation and its impact on pricing power, but also the hottest glucagon-like peptide (GLP)-1 diet pill on the market right now.

In the end, the Goldman Sachs trading department discusses the "sea change" in healthcare: the gap between the winners and losers in US equities in the diet drug boom has exceeded the gap between the winners and losers in the AI boom in the first half of this year.

The chart below shows that the market's excitement about diet pills/GLP-1 (as measured by the ratio of GLP-1 winners to losers) has now surpassed the AI boom that dominated the first half of 2023.