Morning Coffee: The unexpectedly talented 38-year-old at HSBC. The UBS trader who didn’t drink alcohol

Sell-side market strategists know that the first law of their industry is “when we get it right nobody remembers; when we get it wrong, nobody forgets”.  That’s why they have to take advantage of their triumphs by making full use of the bragging rights that you get by making a contrarian market call at just the right time, like Max Kettner of HSBC.

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Kettner, who is HSBC's chief multi-asset strategist and features in a long profile article on Bloomberg, went against the consensus in 2023, when he decided to ignore rising inflation and interest rates, and to concentrate instead on strong economic growth and investor positioning, resulting in a bullish call on equities that he has held on to (bar a few tactical switches, many of which he happily admits were poorly timed) through an 80% rally in the S&P500.  He has therefore profited from the second law of being a market strategist, which is “it’s better to have your good years in a bull market than in a bear market, because there’s more money around to pay bonuses”.

And related to this is the third law of market strategy, which Kettner has also successfully exploited. “Market strategists are generally a bunch of interchangeable white guys, so wear something unusual to stick in clients’ memories”.  When appearing on TV, he often sports a traditional Bavarian jacket.  This obviously isn’t the only reason that he’s gained enough client votes to be the top-ranked European multi-asset strategist for the last five years, but it probably hasn’t hurt.

Despite having maintained a consistent view for a very long time (by the standards of the sell-side), Kettner doesn’t see himself as a “permabull”.  He claims that there have just been unusually many reasons to stay overweight, and that too many of his competition have had their heads turned by geopolitical factors, forgetting that most things which look like they might turn into huge crises actually don’t.

This has helped him, so far, stay clear of the fourth law of being a strategist, which is that “the market can usually stay irrational for longer than you can remain in employment”. The bull run of the last few years has claimed a number of formerly golden reputations, like that of Marko Kolanovic (formerly JPMorgan, Institutional Investor hall of famer, now calling himself “Gandalf” on Twitter) and Hugh Hendry (formerly Eclectica Capital; his Acid Capitalist Summer Camp starts the week after next). 

Although Kettner is currently “maximally bullish”, he admits that 2027 will be “a bit more challenging”. Having been so right for so long, he’s probably earned the right to coin his own law, and it’s hard to beat his closing quote – “Just because you’ve got it largely right for the last few years, you’ll always have to stay alert to make sure that it stays like that”

Elsewhere, the latest filings in Tom Hayes’ litigation against UBS reveal that his nickname apparently used to be “Tommy Chocolate”, because he used to drink hot chocolate at social events rather than alcohol.  This is, the filings allege, important because UBS’s internal investigation into the LIBOR fixing scandal was apparently named “Project Chocolate”; according to Hayes’ lawyers, this might suggest that it was set up to blame him for everything.

A year ago, Hayes had his conviction quashed by the UK’s Supreme Court on the basis that the judge had given incorrect guidance to the jury, but they did not actually exonerate him. At present, UBS is trying to get the suit dismissed on the basis that it should have been brought in London or New York rather than Connecticut (?) and that their co-operation with law enforcement was protected free speech rather than anything malicious.  It seems like Hayes might have an uphill struggle, but somebody who has the confidence to walk  around at a champagne reception carrying a mug topped with whipped cream and marshmallows probably has the confidence to see it through.

Meanwhile …

According to Jamie Dimon, what destroys careers is insecurity.  Every promotion pushes you further out of your comfort zone and diminishes “the proportion of the job that you actually understand”, and not everyone can psychologically cope with it.  If you don’t have “these innate skills to trust people, to get the best out of people, to not get embarrassed by not knowing”, then “It becomes friends of Bob. It becomes PowerPoints: make them look good, don't tell them the bad news”. He watches people in meetings when junior employees talk about problems, and if anyone is “twisting in their chair”, they probably shouldn’t be a manager. (Business Insider)

People are sceptical about how much value 24/7 trading proposals are likely to bring to the London equities market … (Bloomberg)

… and are downright despairing about the same development coming to oil trading, saying “we don’t need it, but it’s coming anyway” (Bloomberg)

After an argument outside a pub involving Gary, an FT journalist got a few more people to speak on the record about Gary Stevenson and his controversial claim to have been the most profitable trader in the world.  It’s looking like he might have been at the top of a spreadsheet, but one which listed Citi’s developed market foreign exchange division rather than the whole bank. (FT Alphaville)

Nine figure fee windfalls aren’t just for equity IPOs these days – JPMorgan and Goldman Sachs are likely to take more than $100m from their roles in the $40bn bridging loan facility for SoftBank’s investment in OpenAI. (Bloomberg)

The London neighbourhood of Hoxton apparently “went from hipster to banker in a couple of decades” (London Review of Books)

Yorkville Advisors, the advisory firm that’s going into business with Dan Ives, has done well out of its links to the Trump family over the last couple of years, and is now a player in the nuclear power industry. (WSJ)

Good news for those bankers and traders who survive the day on a drip feed of espresso – it probably isn’t doing you any harm according to the latest medical research. (WSJ)

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