HSBC’s Max Kettner: The AI Trade Hasn’t Fundamentally Changed

The current equity market downturn mirrors the 2018 "Volmageddon" event, characterized by forced liquidations and a breakdown in market narratives rather than a shift in fundamental economic data. Max Kettner, chief multi-asset strategist at HFPC, observes that investors have abandoned fundamental analysis—noting that semiconductor rental yields remain parabolically high despite the sell-off in chip stocks. The prevailing market narrative has pivoted abruptly from concerns over fiscal sustainability to the declaration that the AI cycle is dead. The upcoming Anthropic IPO serves as a critical catalyst; a successful listing at a reasonable valuation near $1 trillion could stabilize sentiment, whereas further delays may deepen the "flush out" of tech positions. While the NASDAQ and 10-year yields have become highly correlated, the UK’s FTSE 250 offers a potential haven due to positive economic surprises that remain decoupled from the volatile AI-centric trade.