Bloomberg Talks Morgan Stanley's Lisa Shallet Talks Market 'Stall Out'
May 16, 2025
Lisa Shallet, the Chief Investment Officer at Morgan Stanley Wealth Management, shares her insights on the current market landscape. She emphasizes the need to adjust investment strategies as tech growth slows and suggests a shift towards value stocks. Shallet discusses the delicate balance between inflation and recession while highlighting the impacts of rising bond yields on stock valuations. She warns of challenges for smaller companies amidst stronger large-cap performances, urging investors to recalibrate their approaches in this evolving economic climate.
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MAG7 Tech Faces Growth Slowdown
- Growth among the MAG7 tech companies is decelerating, which growth investors dislike.
- Free cash flow yields for these companies are shrinking, signaling tougher market conditions and uncertainty about AI's impact.
Rotate from Tech to Value Stocks
- Investors should take profits in new tech leaders and rotate into beneficiaries of deregulation like financials, energy, and healthcare.
- Emphasize value stocks for risk premium in this market environment.
Unpredictable Fiscal Policy Risks
- The market faces mixed fears of inflation and recession under an unpredictable fiscal policy.
- Unlike stable Fed policy in the past, fiscal policy risks now cause sudden market shifts.