Max Kettner, Chief Multi-Asset Strategist at HSBC, holds a positive outlook on equities, suggesting that the stock rally can continue despite rising bond yields. He attributes this resilience to a robust recovery in corporate earnings and currently low investor positioning levels, which he believes outweigh the potential threat from higher yields.
Kettner's perspective comes as the S&P 500 Index has reached record highs following a six-week surge. This upward trend occurred even in the face of increased oil prices due to the Iran war and elevated bond yields driven by inflation concerns. While some market observers express worries about the market being overextended, Kettner states he is "max bullish" on equities, indicating strong confidence in their continued performance.
His confidence is further bolstered by strong first-quarter corporate results, particularly from technology megacaps. These earnings have provided fundamental support to the stock market rally, alleviating concerns about high Treasury yields. Kettner noted in an interview on Bloomberg Television's *Surveillance* that the "danger zone" of elevated yields can be "ignored for now" due to these blowout earnings.
Kettner also suggests that stocks may not require a specific catalyst to keep rising. He argues that structural factors, such as higher nominal and revenue growth, support increased valuations. He believes that as long as company margins remain stable, earnings will continue their upward trajectory, allowing stocks to climb even without new triggers.
Echoing his earlier sentiments, Kettner reiterated on CNBC's 'Squawk on the Street' that he finds it difficult to believe equities will experience significant price level declines. He maintains that strong earnings, especially from the tech sector, act as a cushion for US equity markets against the impact of higher yields.
