HSBC Strategist Kettner Ends Bullish Stance on U.S. Equities, Shifts to Neutral
nashnova research
HSBC chief multi-asset strategist Max Kettner cut his equity position from maximum overweight to neutral, ending a bullish stance held since mid-March; the trigger: market narratives are shifting too fast to maintain conviction.
What exactly did he change?
Kettner moved his equity allocation from maximum overweight — the highest allowed tilt toward stocks — down to neutral.
He simultaneously raised developed-market sovereign bonds to overweight. This means → he shifted chips from equities to bonds, effectively saying "volatility ahead — hold something steadier."
This is his first equity cut since mid-March, formally ending a prolonged ultra-bullish stance.
Why turn now?
In his client note Kettner wrote: "We can no longer maintain the same degree of conviction in the face of constantly shifting market narratives."
In plain terms = the market storyline is changing so fast he felt he needed to update his view at least weekly — too unstable a rhythm to justify staying heavy in stocks.
He flagged two specific risks: a Democratic sweep in the midterms could tighten AI regulation, and the Iran conflict could re-escalate.
He also voiced concern over the recent rise in long-dated oil prices, noting it is "hard to see an immediate exit."
What do other Wall Street strategists think?
BofA strategist Michael Hartnett believes the risk-off mood — currently visible as a rotation into defensive sectors — may persist deep into November.
Morgan Stanley's Michael Wilson is more optimistic, calling the midterms a potential "clearing event" that could lift equities once election risk is removed.
This reflects a stark Wall Street divide over the same variable — the midterms: one side sees ongoing pressure, the other sees a one-time release.
Is he still constructive on next year?
Kettner remains constructive on 2025 — he has not turned bearish.
He cited three potential tailwinds: a credible Iran de-escalation would create a "golden backdrop of broad easing"; US hyperscale AI companies are generating free cash flow above expectations; and the Fed pivoting to easing.
This means → his logic is "short-term conviction is too low to stay overweight, but the medium-term drivers are intact — no need to go short."
What should investors watch next?
The key checkpoint is the midterm election outcome and its real impact on AI regulation expectations.
In plain terms = a Democratic sweep that genuinely tightens AI rules would force a revaluation of tech-stock multiples; a moderate result could trigger a relief rally instead.
Three threads to track right now: the election timeline + the Iran situation + oil prices. An upside surprise on any one could change the direction.
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