HSBC Strategist Max Kettner: Sectors Beyond AI and Tech Can Participate in Market Rally

Market Outlook: Risk On

• 📈 Max Kettner, HSBC's Chief Multi-Asset Strategist, remains risk-on for the final four months of the year.
• 💡 The core thesis is that nothing much has changed in the market environment.

Signs of Growth Re-acceleration

• 📊 High-frequency indicators in the US, such as credit card spending and retail sales, show signs of re-acceleration since the end of June and beginning of July.
• ⚠️ This pickup is observed across the labor market, consumption, and manufacturing sectors.

Beating Low Expectations

• 📉 Economists had a strong consensus for significant growth deceleration in H2, with artificially high growth in H1 due to front-loading activity.
• 🎯 The low bar for expectations in H2 creates an opportunity for the market to exceed them.

Broadening Market Participation

• 🚀 The current environment suggests a broadening out of the rally beyond just AI and tech stocks.
• 🧩 More economically sensitive sectors are poised to participate in the market gains.

Labor Market Nuances

• ⚠️ Official labor market data is tricky due to significant reversal in immigration flows.
• 📊 The break-even payroll number may be below 50,000, meaning even modest payroll growth could keep the unemployment rate steady or lower.
• 📌 Federal Reserve Chair Powell is focused on the unemployment rate, which appears stable, suggesting the labor market is not in significant trouble.