HSBC's Max Kettner on US tech, earnings, and rate risks (with Jonathan Ferro, Lisa Abramowitz, Annmarie Horden)

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HSBC's Max Kettner on US tech, earnings, and rate risks (with Jonathan Ferro, Lisa Abramowitz, Annmarie Horden)

yields

In a couple of months... things are just too good... the terminal rate may be having to move more towards 4%... that of course would put pressure across all the asset classes. He explicitly warns that strong data (earnings, inflation, employment) in the coming months could force a reassessment of the terminal Fed rate higher.

3/16/2026 9:34:52 PM	short term cautious up	6 days later	+3.14%	+1.57%
3/11/2026 1:03:49 PM	medium term cautious up	20 days later	+1.08%	+0.54%
2/19/2026 6:16:02 PM	short term cautious up	5 days later	-0.93%	-0.47%
1/30/2026 1:43:29 PM	medium term up	21 days later	-5.75%	-5.75%
12/22/2025 2:42:18 PM	medium term up	20 days later	+0.43%	+0.43%
12/6/2025 1:57:50 AM	medium term up	21 days later	-1.34%	-1.34%
8/29/2025 2:18:19 PM	short term cautious down	6 days later	-5.40%	+2.70%

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Introduces Max Kettner of HSBC, whose note asks if US exceptionalism will make a proper comeback. Asks if recent stock gains are due to comfort with Middle East risk or renewed confidence in US tech.

Jonathan Ferro
Max Kettner

Argues gains are due to renewed confidence in US tech, not geopolitics. Middle East events don't matter much for S&P earnings because consumer cyclicals are a tiny part of the index, while Tech/AI is nearly 50% of market cap. The recent rally corrects an irrational 20% derating in S&P multiples seen at the war's start.

Even if lower-income households are hurt, they are not the main drivers of aggregate consumption numbers like retail sales.
Asks if the same positive thesis applies to international/European earnings.

Jonathan Ferro
Max Kettner

European story is more nuanced (chemicals, autos more affected). Currently in a global relief rally driven by falling interest rate volatility. Advises investors to flip the March performance picture: buy what didn't work then. In a second stage (weeks/months), rotate from Europe to US as AI/tech outlook remains strong.

Compares to Russia-Ukraine pattern.
Asks if the thesis is predicated on Big Tech becoming a haven again, and if higher commodity prices change the fundamental picture.

Annmarie Horden
Max Kettner

Higher commodity prices will hurt certain consumers, but not the main contributors to aggregate data. On tech, a fundamental change occurred since Q3: markets now punish higher AI capex, leading to flat hyperscaler prices but soaring earnings. Relative tech valuations are near 10-year lows, making tech cheap on a longer-term basis.

The tech premium has almost vanished.
Notes Kettner has been bullish but with a caveat on yields. Asks how real the risk is that higher yields become a problem, given controlled inflation metrics.

Mentions PolyMarket odds on Fed Chair Powell.

Annmarie Horden
Max Kettner

The yield risk is real, not theoretical. Current bullish stance is tactical (since mid-March) due to clean positioning. In 3-6 months, strong data (high pre-announcement ratio, sticky inflation, falling unemployment) could make things look 'too hot,' pushing the terminal rate toward 4% and pressuring asset classes, with the dollar as the only safe haven.

Q1 reporting season shows corporates are exceeding their own expectations by the most in 5 years.
Asks if, in that 'too hot' scenario, US exceptionalism could make a proper comeback.

Annmarie Horden
Max Kettner

Yes, US exceptionalism would come back because relative valuation compression has exceeded the justified move in relative profitability. The US may even be 'too cheap' given its superior profitability outlook, but this would coincide with a more challenging rate outlook in a couple of months.

People overreacted to AI funding concerns since Q4.

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