Bloomberg Talks Morgan Stanley's Mike Wilson Talks Equities
Feb 24, 2025
Michael Wilson, Chief U.S. Equity Strategist at Morgan Stanley, shares his bearish outlook on U.S. stocks through mid-2024 but highlights the potential for capital inflow into equities. He discusses the tension between strong economic signals and weak corporate earnings. Wilson explores how tariffs are reshaping corporate strategies and impacts investment decisions. He emphasizes the importance of stock picking, particularly in sectors leveraging AI, while noting the concentration in large-cap stocks and their earnings growth prospects.
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Alpha over Beta
- Alpha, stock picking, outperforms beta, market risk, in recent months.
- The S&P 500 has been sideways, but individual stock selection offers opportunities.
Impact of High Real Interest Rates
- High real interest rates, like the current 2%, hinder businesses without easy capital access.
- Government spending drives inflation and keeps interest rates elevated.
Tariffs and Corporate Uncertainty
- Tariff uncertainty affects corporate decision-making, impacting growth expectations.
- Companies relocated manufacturing to avoid China tariffs, a potential factor in current trade tensions.