The forward price-to-earnings multiple on the S&P 500 has fallen more than four points since last November, Max Kettner said, and inside the Nasdaq 100 the damage is worse than that.
His firm expects two more Federal Reserve rate rises by the end of the year. That combination — a house call for higher rates and a view that equities hold — is the opposite of what the market has been assuming the two have to mean together.
"So we have seen quite a bit of damage."
Kettner is HSBC's Chief Multi-Asset Strategist, and the argument he made rests on two things he says the bearish case ignores: how much multiple compression has already happened, and how bearish investor positioning already is.
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Here are the 4 calls that matter.
👤 Guest: Max Kettner, Chief Multi-Asset Strategist at HSBC
🎙️ Host: Carl Quintanilla, who anchors CNBC's Squawk on the Street
🧩 Other segments: Stephen Miran, former Federal Reserve Governor and now a strategist at Hudson Bay Capital; Senator Mark Warner of Virginia on AI regulation; and US Energy Secretary Chris Wright from the G20 energy meeting in Houston
📰 Published: 15 September 2026 on the Squawk on the Street feed
🟣 Apple Podcasts | 🔗 Episode page | ⏱️ 4 min
Key Takeaways
Almost 100bps of Federal Reserve rate rises is already in the price
His own firm forecasts two more hikes by year end, and he still expects equities to hold
The multiple compression has already happened, and nobody is counting it
The S&P 500 is down more than four points of P/E since last November and more than two from the April–May high
Almost 45 Nasdaq 100 names have lost more than 10 points of multiple since mid-May
Almost a third of the index has lost more than 20 points over four months
The only sell signal is coming from the systematic funds
Discretionary positioning is closer to a buy signal, which is what he says caps the downside
The bond market is not judging whether the oil move is temporary — it is simply tracking oil
1. 100bps Already Priced
Quintanilla opened on a session where only one sector was green — energy, up 1% — and a 10-year Treasury yield "very much pinned to 5%, having gotten to 5.04 overnight," then put the contradiction to Kettner directly: his firm forecasts two hikes by year end, and he still thinks equities survive higher yields.
Kettner's first point is that the repricing is behind, not ahead. "Actually, we've got almost 100 basis points of rate hikes for the Fed in the price," and more than that in Europe, where the market has had "quite a bit of a shakeup in the last few trading days."
The offset is that earnings estimates have not turned. The piece he says is overlooked is that "the earnings upward revisions haven't stopped."
He rejects the framing that risk assets are ignoring the rates and oil moves. People say equities, credit spreads and risk assets overall keep ignoring what is happening to yields and to oil, and "I just don't think that's true."
2. The Pain Under the Hood
The index multiple has already taken the hit. "You look at the P/E of the S&P, that's down more than four points from where we were last November," and "It's down more than two points from that local high that we had after the initial recovery in April and in May." His summary: "So we have seen quite a bit of damage."
Underneath the index it is heavier. Within the Nasdaq 100 there are "almost 45 names within the Nasdaq 100" that have seen "a multiple compression of more than ten points" since the middle of May.
Over a slightly longer window the compression is larger still. "In the last four months, you've seen almost a third of the names that have seen a multiple compression of more than 20 points."
3. Positioning Says Buy
Quintanilla noted that the forward price-to-earnings multiple has gone from 23 to 19 and asked whether it reaches 18.
Kettner said no. Valuations are at a level "where it's so cheap" and earnings strength continues so unabatedly that "I'm having a tough time to say, okay, you know what, we're going down another five, 6% actually in price levels even."
The second reason is sentiment, which he says has already turned. Over the last three or four weeks the sentiment and positioning picture has become significantly more bearish.
The one warning sign is mechanical rather than discretionary. "It's the CTAs, it's the momentum signals and our positioning framework that are flashing a bit of bias, a bit of sell signals."
Everything else points the other way. He sees pain over the last few days among the global macro community and probably the emerging market community, and: "Number two, I think the discretionary side is actually still pretty much closer to a buy signal in terms of positioning rather than a sell signal." That is what he says caps the fall — "So that I do think does keep a lid on the downside here."
4. Bonds Just Follow Oil
Quintanilla asked whether the bond move means the market has stopped treating the rise in oil as temporary.
Kettner's answer is that the bond market is not making that judgment at all. "No, I think we're back to where we were in March," and "The bond market is just literally following oil prices."
The relationship holds across markets and across the curve. He named Europe, the SOFR curve and the United States, and dated it to the period since "oil has been rising from around $80."
His description of the two charts is the whole point. "You wouldn't be able to tell which line would be fixed income, which line would be oil. It's literally the same thing, right?"
Bonus Insights
Quintanilla's framing of the session was that only one sector was green — energy, up 1% — with the 10-year Treasury yield pinned near 5% after touching 5.04 overnight.
The forward multiple path Quintanilla put to Kettner was 23 to 19, and the question was whether it goes to 18. Kettner's answer was the only outright no he gave in the segment.
Kettner located the recent damage in specific investor groups rather than in the index: the global macro community and probably the emerging market community have taken pain over the last few days, which is part of why he reads positioning as washed out.
Kettner's bottom line is that the equity market has already paid for higher yields in multiple rather than in price, and that with discretionary investors positioned defensively, a further 5% to 6% fall would need something other than the rates and oil moves already in front of everyone.
Products, Companies & Tools Mentioned
The S&P 500 and the Nasdaq 100 (The two indices he used to separate a four-point fall in the headline multiple from compression of 10 to 20 points in individual names)
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