Earnings are driving market enthusiasm despite lack of economic data: HSBC's Kettner

10/20/2025 11:51:24 PM	short term sharp up	6 days later	-2.71%	-4.07%
8/8/2025 2:47:09 PM	short term sharp up	7 days later	-0.25%	-0.38%

10/20/2025 11:51:24 PM	short term up	6 days later	+2.76%	+2.76%
8/19/2025 9:14:27 PM	short term up	5 days later	+0.76%	+0.76%

10/20/2025 11:51:24 PM	medium term cautious down	20 days later	+4.00%	-2.00%

Indices all coming off their second positive week in three. The Dow and the S&P with their best week since August. Joining us with his outlook this morning, HSBC chief multi-asset strategist Max Kettner. Max, good to see you again. What do you think is driving some of this short-term enthusiasm?

Host 1

Max Kettner

Yeah, I think it's really the earnings side of things because earnings expectations are very low heading into Q3, especially ex technology, which is down 2% quarter over quarter. The rest of the market is not doing as badly, and Q2 saw earnings outperform expectations significantly. This has shifted focus away from just the Magnificent 7 and AI to a broader base.

Are you a buyer of this argument? Some of the leaders of the month are in areas you wouldn't bet on if the economy was slowing—regional banks, homebuilders, oil not doing well, versus defenses like healthcare, utilities, and gold.

Host 1

Max Kettner

Some underperformers are idiosyncratic. On oil, we have had little exposure due to excess supply from the end of US driving season. Regional banks have underperformed large banks significantly since SVB. I'd favor buying large banks caught in the crossfire over regional banks. We're not rotating away from AI and tech but buying dips in banks and rotating into some manufacturing-sensitive sectors like industrials.

How are you looking at the rise in gold, which is up over 3% today, alongside a strong stock market?

Host 2

Max Kettner

Gold's rise is driven by China stockpiling, central bank diversification, and as a hedge against nominal asset price inflation. I'm not buying the debasement trade narrative because the dollar has strengthened and yields have fallen concurrently. Gold is the textbook hedge for ongoing asset price inflation.

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