Latest news with #Kettner
Axios
8 hours ago
- Business
- Axios
Why a weak dollar is bullish for the tech industry
The relentless decline of the dollar in recent months has a silver lining for the tech rally in the stock market. Why it matters: A declining dollar can be considered bullish for U.S. stocks, as it provides an earnings boost for globally exposed companies when they convert their international revenue into dollars on financial statements. With tech and communication services now accounting for nearly half of the S&P 500's market cap, a rally in those sectors would almost certainly lift the broader index. How it works: Take Apple, one member of the Magnificent 7 tech heavyweights, which get about 60% of their revenue outside the U.S. Say Apple sells an iPhone for €1,000 in Europe. The company will then convert this sale into U.S. dollars when it reports earnings. Today, €1 equals $1.17, so a €1,000 sale could convert to $1,170 in reported revenue. In this hypothetical, Apple didn't raise prices or sell more. It just benefits from a weaker dollar. What they're saying: "People are really underestimating how good that weaker dollar is, particularly for tech," Max Kettner, the chief multiasset strategist at HSBC, tells Axios. Yes, but: There's concern that an earnings beat driven by dollar weakness isn't real since it's not rooted in company fundamentals. Some investors question the earnings quality of growth from currency conversions, which can change, rather than underlying financials, like increased revenue. Zoom out: Kettner is pitching bullishness to clients. One recent caller only wanted to discuss left-tail risk, the risk that you lose money. Kettner sees the larger risk on the right tail, where you lose out on making money. "We could genuinely squeeze 10% higher over the next two or three months because the earnings are so strong," he says. What to watch: Earnings season kicks off again in a few weeks. Tech earnings expectations for Q2 mirror Q1, with growth expected to be essentially flat.
CNBC
3 days ago
- Business
- CNBC
Investors are not 'bullish enough' on the stock market rally, HSBC strategist says
One HSBC strategist is pushing back against doubters of the current stock market rally. The S & P 500 's rally off its April lows has brought it back to roughly 1% off its record high in a very short time. It's an advance that has perplexed many investors who worry the market's insistence to look past war, tariffs, and other challenges to the economic outlook could mean another pullback is on the horizon. But Max Kettner, chief multi-asset strategist at HSBC, said he worries he's not "bullish enough" on the current rally, saying he will remain risk on as investors are underestimating the potential upside. "In our mid-year outlook (11 Jun), we argued for a risk-on stance over the summer. This hasn't been met with a lot of agreement in the last two weeks," Kettner wrote Monday. "But, we think the biggest risk to our view is that we're not bullish enough." .SPX 3M mountain S & P 500, over three months For one, the strategist expects that softening earnings growth expectations have given companies a low bar to clear in upcoming reports, which could help their stock prices and the overall index. "Bottom-up Q2 EPS expectations are for SPX earnings to drop sequentially – this creates a very low bar to beat," Kettner wrote. "So, even if growth numbers were to weaken compared to last year, it might well turn out to be better than current consensus expectations. " He also said that the latest escalation of conflict in the Middle East has little bearing on the firm's asset allocation strategy, citing the ability of the market to shake off the recent attacks between Iran and Israel. Another common worry that's overblown is the potential future impact of tariffs, according to Kettner. The strategist said he expects that any fallout will be contained, especially if the Federal Reserve starts to cut interest rates in response to a softening economy, as many think may happen in the latter half of the year. "Risk assets have been remarkably resilient in the face of geopolitical escalation last week …with subdued sentiment and positioning and low near-term growth expectations overriding such concerns," Kettner wrote. "We remain risk-on and stand ready to scale up our exposure further, particularly in the US risk assets."
CNBC
12-06-2025
- Business
- CNBC
HSBC's strategy for U.S. stocks ahead of Q2 earnings: buy-the-dip
Any pullback in stocks going into the second quarter earnings season in July and August might offer investors a good opportunity to increase positions in U.S. equities, according to HSBC. Going into Thursday's trading, the S & P 500 was down about 25 points or a little more than 0.4% from Tuesday's close. Max Kettner, HSBC's chief multi-asset strategist, said in a note to clients published Wednesday that he's "mildly overweight" U.S. stocks, arguing it's unlikely that stocks face more downside risk after the whiplash investors saw following the unveiling of President Donald Trump's high tariff policy in April. The first half of 2025 "has been all about high levels of uncertainty, whether among companies, central banks or in politics," Kettner wrote to clients in a 36-page mid-year outlook. "But when looking at past spikes in economic policy uncertainty, we find that risk assets typically rebound rather than suffer further." Stocks initially plunged as Trump shared his plan for steep tariffs on U.S. imports, briefly sending the S & P 500 into a decline of more than 20% in early April versus the February all-time high. But Trump shortly after paused many of those duties until July, which has allowed the market to claw virtually all those losses. The S & P 500 is now up more than 3% on the year, through Wednesday. Market volatility, as measured by the VIX index traded on the Cboe, has also come down at a historically fast clip after spiking in the wake of Trump's announcement. .SPX YTD mountain S & P 500, year to date Kettner said it's "remarkable ... that despite the latest rally, our sentiment and positioning framework is still nowhere near sending a sell signal." Long-only investors cut back on equities in the first half, and quantitative investors have room to re-leverage, he said. Looking ahead, Kettner said any brief declines in stocks ahead of second-quarter earnings season can provide attractive entry points. In that event, the strategist recommends scaling "up exposure further, particularly in U.S. equities," saying HSBC is heading into the second half of the year with a "risk-on stance" toward financial assets.
Yahoo
11-06-2025
- Business
- Yahoo
HSBC's Kettner upgrades U.S. stocks, sees Q2 dips as buying opportunities
-- HSBC strategists led by Max Kettner upgraded their view for U.S. equities to Overweight from Neutral on Wednesday, citing renewed optimism around artificial intelligence and an expected boost from a weaker dollar. The analysts also see support from subdued positioning and a potential pickup in business activity. Despite high levels of uncertainty in the first half of the year, whether among companies, central banks, or in politics, HSBC remains optimistic. When "looking at past spikes in economic policy uncertainty, we find that risk assets typically rebound rather than suffer further," said the bank. One of the most frequent questions HSBC is receiving is about the next upside catalyst. They believe that persistently "subdued sentiment and positioning" is one, alongside "potential positive activity surprises" and how "the weaker greenback could boost US earnings in Q2." A potential deal on the U.S. tax cut agenda before summer "could be another near-term bullish catalyst for risk assets – assuming no immediate or disorderly long-end yield spike," wrote HSBC. The bank is "mildly OW equities" overall and suggests that investors "use dips in the run-up to the upcoming Q2 reporting season to scale up exposure further," particularly in U.S. equities. Within equities, they are Overweight EM, eurozone, and the U.S. Additionally, they remain Overweight EM debt and high-yield credit, while retaining gold as their "preferred portfolio hedge." Conversely, HSBC is Underweight developed markets rates, especially U.S. Treasuries and Japanese Government Bonds. Related articles HSBC's Kettner upgrades U.S. stocks, sees Q2 dips as buying opportunities Oppenheimer starts QXO at Outperform Jefferies upgrades Smucker's as it sees stock pullback overdone Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
28-03-2025
- Business
- Yahoo
Another big bank has slashed its stock-market outlook amid soaring economic uncertainty
HSBC is the latest big bank to cut its outlook for stocks in 2025. Strategists said the risk of a potential recession and weak economic data are weighing on the outlook. Citi also downgraded its view of US stocks earlier this month on growth concerns. HSBC is the latest banking giant to sour on the outlook for US stocks this year. In a note to clients, strategists at HSBC Securities downgraded their rating of US stocks from "overweight" to "neutral." It follows a similar move by Citi, which cut its rating of US stocks to "neutral" earlier this month. "It is important to stress that we are not turning negative on US equities — but tactically, we see better opportunities elsewhere for now. Prevailing uncertainty around tariffs could see US equities remain challenged in the next few weeks, but we are hesitant to turn too cautious on the medium-term outlook," HSBC said wrote. Max Kettner, chief multi-asset strategist at the bank, told Bloomberg Television that he believes that the economy is going through a "confidence and a sentiment shock." Kettner pointed to the growing risk of a looming economic slowdown, given recent weakness in economic survey data. For one, manufacturing looks to be on weak footing. Activity in the sector and expectations for future activity dropped for the second month in a row in March, while expectations for new orders and shipments also took a hit, according to the Philadelphia Fed's latest Manufacturing Business Outlook Survey. Expectations for the job market are also falling. The Conference Board's Present Situation Index, which measures how consumers feel about the outlook for their income, business activity, and the labor market, fell to a level of 65.2, the lowest in 12 years, the Conference Board said. Levels for the index are well below the key threshold of 80, which has typically been consistent with recessions. "But I do fear that we've seen too much damage, and especially too much broad-based damage in the survey and the broad-based data in order to dismiss it as a one-off," Kettner told Bloomberg on Wednesday. "I don't think this will take three, four, five months. I don't think this is going to be a recession that is basically coming sometime in the second half. I do fear that we might get a pretty sharp slowdown in the data very early on, and very very soon," he added. In a note downgrading its outlook for US stocks earlier in March, Citi also cited growth concerns in their outlook for the market. Strategists, meanwhile, upgraded their rating on Chinese stocks from "neutral" to "overweight," pointing to stronger growth expectations in the nation. "In the big picture, US equity outperformance may well return when the AI narrative takes over again, but in the coming months, we expect US growth momentum to undershoot," the bank wrote. Meanwhile, Goldman Sachs, RBC, and Barclays have also trimmed their price targets for the S&P 500, reflecting more muted expectations for the US market after Wall Street entered 2025 on a wave of bullish sentiment boosted by Trump's policies. Read the original article on Business Insider Sign in to access your portfolio
