HSBC analysts sat in a room and concluded that markets have been resilient lately but might not stay that way. This required a research note. Someone got paid to write this.
The observation here is that bad things kept happening and stocks went up anyway. Then HSBC warned that stocks might not go up forever when bad things happen. Revolutionary stuff. They identified potential future shocks that could break the streak of ignoring shocks. The shocks we ignored before were apparently different from the shocks we might not ignore later. HSBC has figured out the difference. They're not sharing the full details in the headline but they definitely know.
Retail traders read this and nodded solemnly. Finally someone explained why their puts expired worthless every month. It wasn't because they bought weekly options on stocks they saw mentioned in a Reddit thread at 9:45 AM. It was because markets were shrugging off shocks. The shrugging was the problem. Their technical analysis was sound.
Markets shrug off shocks until they don't. This is the insight. HSBC went to business school for this. They built discounted cash flow models. They ran Monte Carlo simulations. They hosted conference calls. The conclusion: things that don't matter suddenly matter sometimes.
The beautiful part is that when markets finally stop shrugging off shocks, HSBC will write another note saying they predicted it. When markets keep shrugging off shocks, they'll write a note saying resilience surprised everyone but them. The research division cannot lose. They've hedged their credibility the same way their clients should've hedged their portfolios.
Every bank publishes this exact note twice a year. They change the font and the date. Morgan Stanley says it in March. Goldman says it in July. HSBC said it whenever this headline dropped. Next quarter JPMorgan will discover that corrections happen sometimes. Citigroup will reveal that valuations eventually matter. None of them will tell you when.
Photo by Rubaitul Azad on Unsplash
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