HSBC's Max Kettner sees a US stock pullback likely before midterms due to historical seasonal patterns and stretched valuations.
HSBC's Kettner explicitly warns of a pullback in US stocks before the midterms, directly impacting the S&P 500 as the broad market benchmark. Historical seasonal weakness and stretched valuations underpin the bearish outlook.
Historically, US stocks tend to experience volatility and often a pullback in the months leading up to midterm elections due to policy uncertainty and investor risk aversion.
The article does not provide a specific magnitude, but Kettner's warning implies a notable correction risk, prompting calls for caution in equity allocations.
A predicted pullback in stocks suggests a rise in market volatility, which would lift the VIX as the primary fear gauge. Kettner's warning implies increased demand for hedges.
Not directly, but inferred: if stocks pull back, volatility typically rises, which would drive VIX higher. The warning heightens the case for a near-term VIX increase.
The VIX is a measure of expected volatility derived from S&P 500 options. Rising downside risks or actual selloffs drive the VIX higher as investors price in larger swings.
HSBC strategist Max Kettner warns that US equities face a heightened risk of a pullback ahead of the November midterm elections. He points to seasonal weakness and elevated valuations as key drivers, advising investors to adopt a cautious stance on equity exposure.
Max Kettner is an equity strategist at HSBC, providing market outlooks and investment recommendations. He recently warned of a stock pullback risk before the US midterm elections.
Kettner cites historical seasonal patterns that show US equities often underperform in the months leading up to midterm elections, combined with elevated valuations that make the market susceptible to pullbacks.