Global Chief Strategist on market disconnect and AI spillovers (with David Ingles, Yvonne Man)

Joe Little highlights a disconnect between low equity volatility and high uncertainty in commodities/policy. He sees AI spillovers into industrials, materials, and energy as key opportunities, and remains bullish on emerging markets for H2, expecting a weaker dollar.

Yields

NDX cautious up , medium term, interviewee implicit

implicit

RUT

Oil

Metals

USD cautious down , medium term, interviewee explicit

explicit

HSBC 8.0
Investment Bank $1686.00B
Joe Little 8.5

Global Chief Strategist on market disconnect and AI spillovers (with David Ingles, Yvonne Man)

dxy

Our scenario over the rest of the year and going into 2027 is for the dollar to continue to weaken. It looks expensive, the weak dollar seems to be a priority for policymakers.

3 calls

-2

no reliable edge (random outcomes)

4/6/2026 7:11:45 PM	short term up	6 days later	-1.27%	-1.27%
1/30/2026 1:43:29 PM	medium term cautious down	21 days later	+0.09%	-0.05%
11/7/2025 12:10:55 AM	medium term cautious down	21 days later	-0.21%	+0.11%

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ndx

He acknowledges the AI boom and supernormal profits driving markets, but warns of positioning risks and potential bond market challenges. He is not bearish but becoming more alert, suggesting a cautious positive view on tech.

Asks about the unseen risk in markets given the 11-day winning streak.

David Ingles
Joe Little

The big challenge is the disconnect between low volatility in equities/bonds/credit and high uncertainty in commodities, policy, and short-term rates. This tension could ultimately challenge the bull market.

Profits have been supernormal, but positioning risks and potential challenges from bond markets need monitoring. Not bearish yet, but becoming more alert.
Asks if the bond market will 'murder the bull market' and notes the confusing 'two shocks and a boom' description.

Yvonne Man
Joe Little

Describes the economy as 'two shocks and a boom': geopolitical shocks and China's export shock, plus the AI investment boom. This creates confusing supply forces dragging inflation/growth in different directions.

Historically, hawkish central banks or bond market vigilantes have been the big challenge for the bull market. That's the area to monitor.
Asks if the broadening out of market performance can continue, given momentum dominance.

Yvonne Man
Joe Little

Last year's broadening out (EM, Europe outperforming US) is challenged this year by more inflation, hawkish central banks, and a stronger dollar. The question is if broadening is finished or can return in moderate form.

Analysis points to AI spillovers in adjacent sectors: infrastructure, materials, energy, and industrials. There is a broader industrial capex story beyond AI, e.g., German defense spending.
Asks what dispersion metrics are telling him.

David Ingles
Joe Little

Equity volatility is surprisingly low, but dispersion is very high. 'The sea looks calm, but underneath the fish are in turbulence.' This creates opportunities for active managers.

Value and low volatility areas have lagged. The narrow leadership indicates dislocations across and within sectors, good for active/hedge fund strategies.
Asks about visibility in earnings for markets like Korea, given parabolic moves.

Yvonne Man
Joe Little

Korea, Taiwan, and China tech show incredibly strong profit growth. EM trades on 12x forward earnings, a discount to the US. Asia still looks interesting and is structurally under-allocated.

EM is only 11% of global markets, 3x lower than its GDP share would suggest. A weaker dollar scenario (expected into 2027) would oxygenate the asset class. EM is still our top pick for H2.

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