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HSBC’s Kettner Sees 'Powerful' First-Half US Market Rally

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Bloomberg Dec 5, 2024 22:07 · 7031 Views

Max Kettner, chief multi-asset strategist at HSBC, explains why he sees "an extremely supportive Goldilocks backdrop" for US equities in the first half of 2025.

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Transcript

  • 00:00 You are looking for a quote, powerful rally.
  • 00:02 Can we put some numbers on that please?
  • 00:05 Yeah, I think
  • 00:06 particularly in age 1, I think that is going to be really, really powerful.
  • 00:09 So we're still going to be overweight equities particularly US,
  • 00:13 but really across the equity spectrum, the most bearish you can get is maybe neutral on a sector and on a
  • 00:19 on a region.
  • 00:20 But honestly, when you look at the numbers, I think, you know, you could easily see some sort of five to 10% up
  • 00:25 in the first six months.
  • 00:26 Because
  • 00:26 just the, the policy backdrop that we've got with continued rate cards
  • 00:31 with, you know, the Fed already starting to hint perhaps as
  • 00:34 some sort of discussion around an end of QT in the last in last week's Fed minutes.
  • 00:39 And then all these sorts of things on the regulation side is either going to be either going to be the same or less On the fiscal side, it's either going to be same fiscal spending or more fiscal spending taxes either going to be the same or less taxes.
  • 00:52 And then, you know, we obviously had these, these revisions to the national accounts two months ago where, where real disposable income of US households has been revised higher by almost a trillion dollars.
  • 01:02 So just putting some numbers on, you know, we've been, we've been talking about how under the hood the US consumer is doing much less well than we all thought.
  • 01:10 Whereas now in reality it looks like actually real disposable income has been around 800 billion higher than the first estimate.
  • 01:18 That ought to be good, particularly with election related uncertainty really subsiding.
  • 01:22 Now I really can see that consensus which is still calling for roundabout
  • 01:27 deceleration of US GDP growth to around potential 1.71.8 in the first half.
  • 01:33 I think that's way too bearish
  • 01:35 and that means earnings expectations also to bearish that really it's it's such an extreme, really supportive Goldilocks backdrop.