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HSBC downgraded US stocks to sell ahead of President Trump's April 2nd Liberation Day announcement. Since then, a slew of U-turns on trade policy have provided some relief for the market, especially among supposedly exempt categories, like tech. As policy continues to rapidly shift, where can investors be hiding out? Joining us with more, Max Kettner, HSBC's chief multi-asset strategist. Max, always a pleasure to speak with you. I know that you remain cautious and skeptical on risk assets, especially in the US. But we continue to see some days of movement to the upside like we're seeing this morning with stocks. Is the market sufficiently pricing in your concerns in terms of US equities at this point?

Yeah, good morning and thanks for having me. Look, I don't think so. When we look at the average stock, look at the equal weighted S&P, in fact what we're seeing is we're not even down 7%. When you look at particularly, for example, some of the more economically sensitive sectors like consumer discretionary, you look at the equal weighted consumer discretionary sector, it's down barely 10%, you know, none of that really screams big, big recession fear. I think what we are seeing right now is sort of the market clinging on to every possible positive news in terms of the tariff, you know, the tariff campaign from President Trump. I'm not particularly sure whether the the market really has got it right there to be to be perfectly honest because you know, all these flip-floppings, all the U-turns that we're seeing, certainly that is not the environment where now in the Q1 reporting season where corporates, CEOs, CFOs will really be full of confidence and will be very happy to provide guidance for the rest of the year, let alone guidance that might be even better than we thought. So, you know, I think that the worry I have particularly for the next two, three weeks is that it's not only the broader equity market, but also the bigger companies, the mega caps perhaps, where either we're going to see corporate guidance for the rest of the year being pulled, or maybe even cut, and cut quite aggressively in light of all these external headwinds.

What do you make of that that guidance so far, Max? All of the big banks coming out with better than expected guidance pretty much across the board. You've got even J&J this morning and we still don't even know what the pharmaceutical tariff rate is going to be and maintaining their forward EPS guidance. Can we trust guidance in this environment?

I'm not, yeah, I would take it with a with a huge pinch of salt. I think we've seen in some of the banks as well last week, for example, JP Morgan, we saw some of the the loan loss provisions materially higher, at least relative to to our own analysts' expectations. So, clearly, you know, I think the market again, is clinging on to the positive news, and it's sort of burying the the more negative news flow at the moment. I'm not sure how long that will hold. I think what we're in right now is the sort of classic bear market rally stage where, you know, sentiment is so clean, and I think that's what we are seeing. We've just looked at our sort of aggregate 20 sentiment and positioning indicators, and yes, it is, it really has been sending the biggest buy signal in about two and a half years. That, of course, rests on the assumption that we have either more policy clarity, or at least, we don't have more negative news on the policy front, both of which looks really questionable, I think, for the next couple of weeks and months.

So Max, what are the safe havens in this environment? I know you don't foresee a lot of safety in the US dollar or in US bonds.

Yeah, I mean, you guys were just talking about it, about Treasuries and about the US, and then the negative equity bond correlation no longer really being present at the moment. So that to us really means from a safe haven perspective, much more into things like the Japanese yen, right? So you raise some cash, you guys were talking about it before, when you raise some cash, so what do you do? You know, you probably go into things like the Japanese yen. If indeed, the sell-off does continue, you know, that typically really benefits things like the Japanese yen, maybe even like the Swiss franc. But I would really say, globally, it's probably a bit more the Japanese yen, as US yields, you know, even if they come down, fine, maybe it's then recession fears if they come down, but it's very US-centric recession fears. Is that good for the dollar? Not really. If yields go up, maybe because of either debt sustainability concerns, or because of concerns around stagflation, again, both of which would really not be positive for the dollar, let alone for the long end. So it is much more Japanese yen. I would say also, under the scenarios of debt sustainability concerns or concerns around stagflation. Indeed, even if it was full-blown recession concerns, you know, it's probably much more gold where you want to be in, rather than really long end Treasuries because, you know, in two of those three scenarios, clearly gold winning out. In one of them, in the recession scenario, probably gold performing sort of in line with with US rates. So I'd much, much, much rather be buying gold still at these levels, yeah.