HSBC Strategist Max Kettner: 'Almost Maximum Bullish' on US Equities

Bullish Outlook on Equities

• 🚀 HSBC is 'almost maximum bullish' on equities, with a particular focus on the U.S. and emerging markets.
• 💡 This bullish stance is considered appropriate given the current market environment, potentially even a classic 'sell in May and go away' year.

Banking Sector Strength

• 🏦 The banking sector, especially Japanese and European banks, appears strong due to curve steepening and repricing of front-end rate expectations.

Potential Future Headwinds

• ⚠️ Concerns for the second half of the year include potential tailwinds turning into headwinds from fiscal, capex (including AI), and monetary impulses.
• 📉 These impulses, currently positive, might shift from 2026 to 2027, requiring mindful observation.

Interest Rates and Market Pricing

• 📊 The market is correctly discounting that monetary easing might not happen as initially expected.
• 📉 HSBC is significantly underweight in rates, particularly in the U.S. and JGBs.
• 📈 For risk assets to be negatively impacted, markets would need to price in a tail risk of rate hikes, not just fewer rate cuts.

Goldilocks Economy Data

• 🌟 Recent economic data, like payrolls and CPI, supports a 'Goldilocks' scenario – not too hot, not too cold.
• 📈 Payrolls showed a slight dip in hiring but improved unemployment rates and higher earnings, offering something for both bulls and bears.
• 🎯 CPI data was down but not enough to justify recessionary rate pricing, creating an ideal environment for higher beta equities.