Thoughts on the Market

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1. Four Key Investment Themes for 2025

   15 januari 2025 · 5 min

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   Our Global Head of Fixed Income & Public Policy Research Michael Zezas discusses how Morgan Stanley’s key themes – deglobalization, longevity, the future of energy, and artificial intelligence – will evolve in 2025 and beyond. Lees meer

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   Welcome to Thoughts on the Market. I’m Michael Zezas, Morgan Stanley’s Global Head of Fixed Income and Public Policy Research. Today I’ll discuss the key investment megatrends Morgan Stanley Research will be following closely in 2025.

   It’s Wednesday, January 15th, at 10am in New York.

   Short-term trends can offer investors valuable insights into immediate market dynamics. But it’s the long-term trends that truly shape the investment landscape. That’s why each year, Morgan Stanley Research identifies a short list of megatrends that we believe will provide long-term investment opportunities in an ever-changing world.

   Three of Morgan Stanley’s megatrends—artificial intelligence, longevity, and the future of energy—carry over from last year. A fourth—the rewiring of the global economy—returns to our list after a hiatus in 2024. While none of these megatrends is new, each has evolved in terms of how it applies to investment strategies.

   Let’s start with the rewiring of global commerce for a Multipolar World. As I mentioned, this theme rejoins our list of key megatrends after a year-long break. Why? In short, it’s clear that policymakers globally are poised to implement policies that will speed up the breakdown of the post-Cold War globalization trend. Simply put, policymakers are keen to promote their visions of national and economic security through less open commerce and more local control of supply chains and key technologies. Multinationals and sovereigns may have to accelerate their adaptation to this reality. Some will face tougher choices than others, while there are some who may still benefit from facilitating this transition. Knowing who fits into which category—and how this new reality may play out—will be crit…

2. Finding Opportunity in AI’s Evolution

   14 januari 2025 · 5 min

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   Our Global Head of Thematic Research Ed Stanley discusses how artificial intelligence is changing and what could be in store for investors in 2025. Lees meer

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   Welcome to Thoughts on the Market. I’m Ed Stanley, Morgan Stanley’s Global Head of Thematic Research. Today I'll discuss how understanding AI’s rate of change can generate alpha in the year of AI agents.

   It’s Tuesday, the 14th of January, at 2 PM in London.

   Even if you haven't been using artificial intelligence in your work or home life yet – you’ll doubtless have heard about its capabilities by now. Tasked, for example, with drafting an elevator pitch for a 100-page report; it's a tedious task at the best of times. But using an AI model not only does it become a breeze, but these models can also generate you a podcast – if you so wish – through which to disseminate it, and almost in any language conceivable. But now imagine the algorithm begins thinking through multi-stage processes itself – planning, executing – to generate that 100-page report itself, in the first place. That … is an example of Agentic AI.

   As the name implies, this next phase of AI development is where software programs gain agency, transitioning from reactive chatbots that we’ve been using into proactive task fulfillment agents. And this transition is happening now.

   Over the past 36 months, we’ve gone from reliable output that can displace or supplement 5-second or 5-minute tasks, such as translation or quick summaries, to models that are providing reliable output for 15-minute tasks, 1-hour tasks – like the ones that I just mentioned. And each time the skeptics have claimed that model improvements are slowing down, and thus call into question the returns on hundreds of billions of dollars that have been spent on AI infrastructure, the AI research labs manage to take another leap forward, surprising even seasoned analysts.

   That’s why we think this is such an important trend for 2025. AI Adopter companies that can levera…

3. Big Debates: The State of the Energy Transition

   13 januari 2025 · 14 min

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   In the latest edition of our Big Debates miniseries, Morgan Stanley Research analysts discuss the factors that will shape the global energy market in 2025 and beyond, and where to look for investment opportunities. Lees meer

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   Michelle Weaver: Welcome to Thoughts on the Market. I'm Michelle Weaver, U.S. thematic and Equity strategist at Morgan Stanley.

   Devin McDermott: I'm Devin McDermott, Head of Morgan Stanley's North America Energy Team.

   Mike Canfield: And I'm Mike Canfield, Head of the Europe Sustainability Team,

   Michelle Weaver: This is the second episode of our special miniseries, Big Debates, where we cover key investment debates for 2025. Today, we'll look at where we are in the energy transition and some key investment opportunities.

   It's Monday, January 13th at 10am in New York.

   Mike Canfield: And 3pm in London.

   Michelle Weaver: Since 2005, U.S. carbon emissions have fallen by about 15 percent. Nearly all of this has been tied to the power sector. Natural gas has been displacing coal. Renewable resources have seen higher penetration. When you look outside the power sector, though, progress has been a lot more limited.

   Let me come to you first, Devin. What is behind these trends, and where are we right now in terms of the energy transition in the U.S.?

   Devin McDermott: Over the last 20 years now, it's actually been a pretty steady trend for overall U.S. emissions. There's been gradual annual declines, ratcheting lower through much of this period. [There’s] really two primary drivers.

   The first is, the displacement of coal by natural gas, which is driven about 60 percent of this reduction over the period. And the remainder is higher penetration of renewable resources, which drive the remaining 40 percent. And this ratio between these two drivers -- net gas displacing coal, renewables adding to the power sector -- really hasn't changed all that much. It's been pretty consistent even in this post COVID recovery relative to the 15 years p…

4. Big Debates: The AI Evolution

   10 januari 2025 · 9 min

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   In the first of a special series, Morgan Stanley’s U.S. Thematic and Equity Strategist Michelle Weaver discusses new frontiers in artificial intelligence with Keith Weiss, Head of U.S. Software Research. Lees meer

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   Michelle: Welcome to Thoughts on the Market I'm Michelle Weaver, Morgan Stanley's U.S. Thematic and Equity Strategist.

   Keith: And I'm Keith Weiss, Head of U.S. Software Research.

   Michelle: This episode is the first episode of a special series we’re calling “Big Debates” – where we dig deeper into some of the many hot topics of conversation going on right now. Ideas that will shape global markets in 2025. First up in the series: Artificial Intelligence.

   It's Friday, January 10th at 10am in New York.

   When we look back at 2024, there were three major themes that Morgan Stanley Research followed. And AI and tech diffusion were among them. Throughout last year the market was largely focused on AI enablers – we’re talking semiconductors, data centers, and power companies. The companies that are really building out the infrastructure of AI.

   Now though, as we’re looking ahead, that story is starting to change.

   Keith, you cover enterprise software. Within your space, how will the AI story morph in 2025?

   Keith: I do think 2025 is going to be an exciting year for software [be]cause a lot of these fundamental capabilities that have come out from the training of these models, of putting a lot of compute into the Large Language Models, those capabilities are now being built into software functionality. And that software functionality has been in the market long enough that investors can expect to see more of it come into results. That the product is there for people to actually buy on a go forward basis.

   One of the avenues of that product that we're most excited about heading into 2025 is what we're calling agentic computing, where we're moving beyond chatbots to a more automated proactive type of interface into that software functionality that c…

5. 2025: Setting Expectations

   10 januari 2025 · 4 min

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   Our Head of Corporate Credit Research, Andrew Sheets, offers up bull, bear and base cases for credit markets in the year ahead. Lees meer

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   Welcome to Thoughts on the Market. I'm Andrew Sheets, Head of Corporate Credit Research at Morgan Stanley. Today, I’m going to revisit our story for 2025 – and what could make things better or worse.

   It's Thursday, January 9th at 2pm in London.

   Based on the number of out-of-office replies, I have a sneaking suspicion that many investors took advantage [of] the timing of holidays this year for a well deserved break. With this week marking the first full week back, I thought it would be a good opportunity to refresh listeners on what we expect in 2025, and realistic scenarios where things are better or worse.

   Our base case is that credit holds up well this year, doing somewhat better in the first half of 2025 than the second. Credit likes moderation, and while we think the shift in U.S. policy leadership generally means less moderation, and a wider range of economic outcomes, this shift doesn’t arrive immediately. On Morgan Stanley’s forecasts, the bulk of the disruptive impact from any changes to tariffs or immigration policy hits in 2026.

   Meanwhile, Credit is entering 2025 with some pretty decent tailwinds. The economy is good. The all-in yield – the total yield – on US investment grade corporate bonds, at above 5.4 per cent, is the highest to start any year since January of 2009 – which we think helps demand. And while we think corporate confidence and aggression will rise this year, normally a bad thing for credit; this is going to be coming off of a low, conservative starting point.

   We think that credit spreads will be modestly tighter by mid-year relative to where they finished 2024, and then start to widen modestly in the second half of the year – as the market attempts to price that greater policy uncertainty in 2026. We think that issuers in the Financial and Utilities sectors outperform, and we think b…

6. Market Implications of Trump’s Agenda

   8 januari 2025 · 4 min

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   With the inauguration of President-elect Donald Trump approaching, our Global Head of Fixed Income and Public Policy Research weighs the impact for investors of his potential policy measures. Lees meer

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   Welcome to Thoughts on the Market. I’m Michael Zezas, Morgan Stanley’s Global Head of Fixed Income and Public Policy Research. Today on the podcast I'll be talking about what investors need to know about recent US policy developments.

   It’s Wednesday, Jan 8th, at 2:30pm in New York.

   In less than two weeks, Donald Trump will again become the sitting President of the United States. The economic and market consequences of the policies he might enact, either on his own or in concert with the Congress, continue to be an important debate for investors. Our view has been that the sequencing and severity of policy choices across tariffs, taxes, immigration, and regulation would be very meaningful to the market's outlook.

   So, have we learned anything from news around the policy discussions inside the incoming administration and congressional leaders? Let’s consider it here and level set.

   First, there‘s been news about Republicans debating their approach to legislating some of President Trump’s top policy priorities. That debate centers around whether to create one big bill around taxes, immigration, and a host of other issues or to break it into multiple bills. Leading with immigration reforms, where there may be more consensus within Republicans’ slim Congressional majority; and then following it up with tax cuts and extensions, which may take more time to negotiate given myriad interests. While investors have asked us about this debate quite a bit, the distinction between the approaches may not make much of a difference to investors.

   At the end of the day, what should matter most to markets is the timing and size of the fiscal impact driven by tax changes. Going with one big bill may seem faster, but we’re reminded of the saying ‘Nothing is agreed until e…

7. What Could Shape the Global Economy in 2025

   7 januari 2025 · 5 min

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   Our Global Chief Economist Seth Carpenter weighs the myriad variables which could impact global markets in 2025, and why this year may be the most uncertain for economies since the start of the pandemic. Lees meer

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   Seth Carpenter: Welcome to Thoughts on the Market. I'm Seth Carpenter, Morgan Stanley's Global Chief Economist, and today I'll be talking about 2025 and what we might expect in the global economy.

   It's Tuesday, January 7th at 10am in New York.

   Normally, our year ahead outlook is a roadmap for markets. But for 2025, it feels a bit more like a choose your own adventure book.

   uncertainty is a key theme that we highlighted in our year ahead outlook. The new U.S. administration, in particular, will choose its own adventure with tariffs, immigration, and fiscal policy.

   Some of the uncertainty is already visible in markets with the repricing of the Fed at the December meeting and the strengthening of the dollar. Our baseline has disinflation stalling on the back of tariffs and immigration policy, while growth moderates, but only late in the year as the policies are gradually phased in.

   But in reality, the sequencing, the magnitude and the timing of these policies remains unknown for now, but they're going to have big implications for the economies and central banks around the world. The U.S. economy comes into the year on solid footing with healthy payrolls and solid consumption spending.

   Disinflation is continuing, and the inflation data for November were in line with our forecast, but softer in terms of PCE than what the Fed expected. While the Fed did lower their policy rate 25 basis points at the December meeting, Chair Powell's tone was very cautious, and the Fed's projections had inflation risks skewed to the upside.

   The chair noted that the FOMC was only beginning to build in assumptions about policy changes from the new administration. Now, we have conviction that tariffs and immigration restriction will both slow the economy and bo…

8. Will 2024’s Weak Finish Extend into the New Year?

   6 januari 2025 · 5 min

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   Our CIO and Chief U.S. Equity Strategist Mike Wilson considers the year-end slump in U.S. stocks, and whether more market-friendly policies can change the narrative. Lees meer

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   Welcome to Thoughts on the Market. I'm Mike Wilson, Morgan Stanley’s CIO and Chief US Equity Strategist. Today on the podcast I’ll be discussing the weak finish to 2024 and what it means for 2025.

   It's Monday, Jan 6th at 11:30am in New York.

   So let’s get after it.

   While 2024 was another solid year for US equity markets, December was not. The weak finish to the year is likely attributable to several factors. First, from September to the end of November, equity markets had one of their better 3-month runs that also capped the historically strong 1- and 2-year advances. This rally was due to a combination of events including a reversal of recession fears this summer, an aggressive 50 basis points start to a new Fed cutting cycle, and an election that resulted in both a Republican sweep and an unchallenged outcome that led to covering of hedges into early December. This also lines up with my view in October that the S&P 500 could run to 6,100 on a decisive election outcome.

   Second, long-term interest rates have backed up considerably since the summer when recession fears peaked. Importantly, this 100 basis point back-up in the 10-year US Treasury yield occurred as the Fed cut interest rates by 100 basis points. In my view, the bond market may be calling into question the Fed’s decision to cut rates so aggressively in the context of stabilizing employment data. The fact that the term premium has risen by 77 basis points from the September lows is also significant and may be a by-product of this dynamic and uncertainty around fiscal sustainability. As we suggested two months ago, if the change in the term premium was to materially exceed 50 basis points, the equity market could start to take notice and hurt valuations. Indeed, Equity multiples peaked in early- to mid-December aro…

9. Lessons to Take Into 2025

   3 januari 2025 · 4 min

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   With the start of the new year, our Head of Corporate Credit Research Andrew Sheets looks back to look ahead at trends for credit and other markets in 2025. Lees meer

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   Welcome to Thoughts on the Market. I'm Andrew Sheets, Head of Corporate Credit Research at Morgan Stanley. Today I’ll be discussing the lessons we can learn from 2024 – a remarkable year that also may be easily forgotten.

   It's Friday January 3rd at 2pm in London.

   In 2024 I celebrated my 20th year with Morgan Stanley. Among my regrets over this time was not keeping a better journal. It’s notable how quickly events in the market that seemed large and remarkable at the time can fade in one’s memory as the years merge together. How markets that seem easy or obvious in hindsight were anything but.

   I say this because many years from now, 2024 may end up being one of those relatively forgettable years. Another year where – as usually happens – the stock market went up. Another year where stocks outperformed bonds, the US dollar strengthened, and US stocks beat those abroad.

   Yet what is significant about 2024 is the scale of all these trends. For anyone managing money, the question of “stocks versus bonds”, “US versus rest-of-world”, “large versus small” or “growth versus value” are some of the most fundamental strategic questions one faces.

   These calls don’t always matter. But last year, they did – to a very large degree. Global stocks outperformed bonds by about 20 percent. Growth outperformed Value by practically the same amount. US stocks beat their global peers by 13 per cent. In short, one’s experience in 2024 and relative performance could have varied significantly, based on just a few relatively simple decisions.

   Related to that is the second lesson. 2024 was the reminder that while Valuation is a powerful long-term force, it can be a much more frustrating 12-month guide. All of those relative relationships I just mentioned – stocks versus bonds, growth versus value, US versus Int…

10. A Bumpy Road Ahead for Onshoring EVs

    2 januari 2025 · 4 min

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    Our Head of Global Autos & Shared Mobility Adam Jonas discusses why the electric vehicle market may see a small reset in 2025, but ultimately accelerate under a Trump Administration. Lees meer

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    Adam Jonas: Welcome to Thoughts on the Market. I'm Adam Jonas, Morgan Stanley's Head of Global Autos and Shared Mobility. Today, I'll be talking about the outlook for U.S. automakers and electric vehicles.

    It's Thursday, January 2nd at 1pm in New York.

    With Trump's inauguration just around the corner, we've seen a resurgence in many auto stocks tied to Internal Combustion Engines, also known as ICE. While questions swirl around the outlook for electric vehicles. In the near term we do think it'll be a bumpy ride for the U.S. EV market. But looking toward the second half of this year and beyond, we think there's hidden value in the EV sector for a number of reasons.

    First, let's look at the big picture. In our 2025 outlook for U.S. auto sales, we anticipate demand of 16.3 million units, a modest increase from the previous year, underpinned by projected U.S. GDP growth of around 1.9 percent and lower policy interest rates for auto loans. Looking specifically at EVs, we think the trajectory will be first a dip, then a rip scenario. That is, we're lowering our 2025 forecasts for U.S. EV penetration to 8.5 percent, down slightly from 9 percent previously. However, our long-term outlook remains unchanged, and we continue to forecast significant growth for EVs by 2040.

    Now for the big question. What does a Trump administration mean for EVs? Following the U.S. election, investors hopped on the ‘ICE is Nice’ trade based on the expectation that a Trump administration will bring more relaxed U.S. emission standards, reduced EV incentives, and finally increased tariffs – which would drive up the costs of key EV components, such as batteries and semiconductors, predominantly manufactured in Asia.

    But the real story is more nuanced. You can't talk about EVs without talk…

11. Special Encore: Will US Tariffs Drive Mexico Closer to China?

    31 december 2024 · 10 min

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    Original Release Date November 22, 2024: Our US Public Policy Strategist Ariana Salvatore and Chief Latin America Equity Strategist Nikolaj Lippmann discuss what Trump’s victory could mean for new trade relationships. Lees meer

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    Andrew Sheets: 2024 was a year of transition for economies and global markets. Central banks began easing interest rates, U.S. elections signaled significant policy change, and Generative AI made a quantum leap in adoption and development.

    Thank you for listening throughout 2024, as we navigated the issues and events that shaped financial markets, and society. We hope you'll join us next year as we continue to bring you the most up to date information on the financial world. This week, please enjoy some encores of episodes over the last few months and we'll be back with all new episodes in January. From all of us on Thoughts on the Market, Happy Holidays, and a very Happy New Year.

    Ariana Salvatore: Welcome to Thoughts on the Market. I'm Ariana Salvatore, Morgan Stanley's US Public Policy Strategist.

    Nikolaj Lippmann: And I'm Nik Lippmann, Morgan Stanley's Chief Latin American Equity Strategist.

    Ariana Salvatore: Today, we're talking about the impact of the US election on Mexico's economy, financial markets, and its trade relationships with both the US and China.

    It's Friday, November 22nd at 10am in New York.

    The US election has generated a lot of debate around global trade, and now that Trump has won, all eyes are on tariffs. Nik, how much is this weighing on Mexico investors?

    Nikolaj Lippmann: It’s interesting because there's kind of no real consensus here. I'd say international and US investors are generally rather apprehensive about getting in front of the Trump risk in Mexico; while, interestingly enough, most Mexico-based investors and many Latin American investors think Trump is kind of good news for Mexico, and in many cases, even better news than Biden or Harris. Net, net, Mexican peso has sold off. Mexico's n…

12. Special Encore: Uncertainty Surrounds 2025 U.S. Equities Outlook

    30 december 2024 · 12 min

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    Original Release Date November 26, 2024: Morgan Stanley’s CIO and Chief U.S. Equity Strategist Mike Wilson joins Andrew Pauker of the U.S. Equity Strategy team to break down the key issues for equity markets ahead of 2025, including the impact of potential deregulation and tariffs. Lees meer

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    Andrew Sheets: 2024 was a year of transition for economies and global markets. Central banks began easing interest rates, U.S. elections signaled significant policy change, and Generative AI made a quantum leap in adoption and development.

    Thank you for listening throughout 2024, as we navigated the issues and events that shaped financial markets, and society. We hope you'll join us next year as we continue to bring you the most up to date information on the financial world. This week, please enjoy some encores of episodes over the last few months and we'll be back with all new episodes in January. From all of us on Thoughts on the Market, Happy Holidays, and a very Happy New Year.

    Mike Wilson: Welcome to Thoughts on the Market. I'm Mike Wilson, Morgan Stanley’s CIO and Chief US Equity Strategist.

    Andrew Pauker: And I'm Andrew Pauker from our US Equity Strategy Team.

    Mike Wilson: Today we'll discuss our 2025 outlook for US equities.

    It's Tuesday, November 26th at 5pm.

    So let's get after it.

    Andrew Pauker: Mike, we're forecasting a year-end 2025 price target of 6,500 for the S&P 500. That's about 9 percent upside from current levels. Walk us through the drivers of that price target from an earnings and valuation standpoint.

    Mike Wilson: Yeah, I mean, I think, you know, this is really just rolling forward what we did this summer, which is we started to incorporate our economists’ soft-landing views. And, of course, our rate strategist view for 10-year yields, which, you know, factors into valuation.

    We really didn't change any of our earnings forecast. That's where we've been very accurate. What we've been not accurate is on the multiple. And I think a lot…

13. Special Encore: A $10 Trillion Opportunity in US Reshoring

    27 december 2024 · 4 min

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    Original Release Date October 25, 2024: After decades of offshoring, the pendulum for US manufacturing is swinging back toward domestic production. Our US Multi-Industry Analyst Chris Snyder looks at what’s behind this trend. Lees meer

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    Andrew Sheets: 2024 was a year of transition for economies and global markets. Central banks began easing interest rates, U.S. elections signaled significant policy change, and Generative AI made a quantum leap in adoption and development.

    Thank you for listening throughout 2024, as we navigated the issues and events that shaped financial markets, and society. We hope you'll join us next year as we continue to bring you the most up to date information on the financial world. This week, please enjoy some encores of episodes over the last few months and we'll be back with all new episodes in January. From all of us on Thoughts on the Market, Happy Holidays, and a very Happy New Year.

    Chris Snyder: Welcome to Thoughts on the Market. I’m Chris Snyder, Morgan Stanley’s US Multi-Industry Analyst. Today I’ll discuss the far-reaching implications of shifting industrial production back to the United States.

    It’s Friday, October 25th, at 10am in New York.

    Global manufacturing is undergoing a seismic shift, and the United States is at the epicenter of this transformation. After decades of offshoring and relying on international supply chains, the pendulum is swinging back toward domestic production. This movement – known as reshoring – is not just a fleeting trend but a strategic realignment of manufacturing capabilities that is indicative of the “multipolar” theme playing out globally.

    In fact, we believe the US is entering the early innings of re-Industrialization – a multi-decade opportunity that we size at $10 trillion and think has the potential to restore growth to the US industrial economy following more than 20 years of stagnation.

    The reshoring of manufacturing to the US is fueled by a combination of factors that a…

14. Special Encore: Housing, Currency Markets in Focus

    26 december 2024 · 13 min

    Afspelen
    Original Release Date November 19, 2024: On the second part of a two-part roundtable, our panel gives its 2025 preview for the housing and mortgage landscape, the US Treasury yield curve and currency markets. Lees meer

    ----- Transcript -----

    Andrew Sheets: 2024 was a year of transition for economies and global markets. Central banks began easing interest rates, U.S. elections signaled significant policy change, and Generative AI made a quantum leap in adoption and development.

    Thank you for listening throughout 2024, as we navigated the issues and events that shaped financial markets, and society. We hope you'll join us next year as we continue to bring you the most up to date information on the financial world. This week, please enjoy some encores of episodes over the last few months and we'll be back with all new episodes in January. From all of us on Thoughts on the Market, Happy Holidays, and a very Happy New Year.

    Vishy Tirupattur: Welcome to Thoughts on the Market. I am Vishy Tirupattur, Morgan Stanley's Chief Fixed Income Strategist. This is part two of our special roundtable discussion on what's ahead for the global economy and markets in 2025.

    Today we will cover what is ahead for government bonds, currencies, and housing. I'm joined by Matt Hornbach, our Chief Macro Strategist; James Lord, Global Head of Currency and Emerging Market Strategy; Jay Bacow, our co-head of Securitized Product Strategy; and Jim Egan, the other co-head of Securitized Product Strategy.

    It's Tuesday, November 19th, at 10am in New York.

    Matt, I'd like to go to you first. 2024 was a fascinating year for government bond yields globally. We started with a deeply inverted US yield curve at the beginning of the year, and we are ending the year with a much steeper curve – with much of that inversion gone. We have seen both meaningful sell offs and rallies over the course of the year as markets negotiated hard landing, soft landing, and no landing scenarios.

    With the election behind us and …

15. Special Encore: What’s Ahead for Markets in 2025?

    24 december 2024 · 11 min

    Afspelen
    Original Release Date November 18, 2024: On the first part of a two-part roundtable, our panel discusses why the US is likely to see a slowdown and where investors can look for growth. Lees meer

    ----- Transcript -----

    Andrew Sheets: 2024 was a year of transition for economies and global markets. Central banks began easing interest rates, U.S. elections signaled significant policy change, and Generative AI made a quantum leap in adoption and development.

    Thank you for listening throughout 2024, as we navigated the issues and events that shaped financial markets, and society. We hope you'll join us next year as we continue to bring you the most up to date information on the financial world. This week, please enjoy some encores of episodes over the last few months and we'll be back with all new episodes in January. From all of us on Thoughts on the Market, Happy Holidays, and a very Happy New Year.

    Vishy Tirupattur: Welcome to Thoughts on the Market. I'm Vishy Tirupattur, Morgan Stanley's Chief Fixed Income Strategist. Today in the podcast, we are hosting a special roundtable discussion on what's ahead for the global economy and markets in 2025.

    I'm joined by my colleagues: Seth Carpenter, Global Chief Economist; Mike Wilson, Chief US Equity Strategist and the firm's Chief Investment Officer; and Andrew Sheets, Global Head of [Corporate] Credit Research.

    It's Monday, November 18th, at 10am in New York.

    Gentlemen. Thank you all for taking the time to talk. We have a lot to cover, and so I'm going to go right into it.

    Seth, I want to start with the global economy. As you look ahead to 2025, how do you see the global economy evolving in terms of growth, inflation and monetary policy?

    Seth Carpenter: I have to say – it's always difficult to do forecasts. But I think right now the uncertainty is even greater than usual. It's pretty tricky. I think if you do it at a global level, we're not actually looking for all that much of a change, you know, around 3-ish percent growth;…

16. The Many Potential Policy Paths of Trump’s Second Term

    23 december 2024 · 6 min

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    Our Global Head of Fixed Income and Thematic Research joins our U.S. Public Policy Strategist to give investors their policy expectations for President-elect Trump’s second term, including the potential market and economic consequences of those policies if enacted. Lees meer

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    Michael Zezas: Welcome to Thoughts on the Market. I'm Michael Zezas, Morgan Stanley's global head of fixed income and thematic research.

    Ariana Salvatore: And I'm Ariana Salvatore, U.S. public policy strategist.

    Michael: And on this episode of Thoughts on the Market, we'll talk about potential policy paths the second Trump administration might pursue.

    It's Monday, December 23rd at 10am in New York.

    The U.S. presidential election is behind us and we're well into the holiday season, but we're still focusing closely on what U.S. policy might look like in 2025. Ariana, what have we learned in the past couple of weeks regarding Trump's policy plans for next year?

    Ariana: So the variables or policy items that we're watching are still the same ones that we were tracking over the past year or so. That's tariffs, taxes, immigration and deregulation. But to your point, the election is now obviously behind us, and we do have some incremental information that's helped us construct a base case across these variables. For example, President elect Trump has made some key personnel appointments that we think are going to play a big role in exactly how these policies are carried out. His pick for Treasury Secretary, Scott Besant, is a good example that gives us conviction in a more gradual, incrementalist approach to tariffs. Translating that principle across all the policy variables, as well as the extremely thin majority the Republicans have in the House of Representatives, has helped us form the foundation of our base case, which we call “fast decisions, slow implementation.”

    In short, we think that means you should expect major policy changes will be announced quickly, think first quart…

17. More Talk, Less Action Could Be Good for Credit Markets

    20 december 2024 · 4 min

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    Our Head of Corporate Credit Research lists realistic scenarios for why credit could outperform expectations in 2025, despite some risks posed by policy changes from the incoming administration. Lees meer

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    Welcome to Thoughts on the Market. I'm Andrew Sheets, head of Corporate Credit Research at Morgan Stanley. Today I’ll be discussing realistic scenarios where things could be better than we expect.

    It's Friday December 20th at 2pm in London.

    Credit is an asset class that always faces more limited upside, and the low starting point for spreads as we enter 2025 further limits potential gains. Nevertheless, there are still a number of ways where this market could do better than expected, with spreads tighter than expected, into next year.

    An obvious place to start is U.S. policy. Morgan Stanley’s public policy strategy team thinks the incoming administration will be a story of “fast announcement, slow implementation”, with the growth and inflation impact of tariffs and immigration falling more in 2026 (rather than say earlier). And so if one looks at Morgan Stanley’s forecasts, our growth numbers for 2025 are good, our 2026 numbers are weaker.

    The bull case could be that we see more talk but less ultimate action. Scenarios where tariffs are more of a negotiating tool than a sustained policy would likely mean less change to the current (credit friendly) status quo, and also increase the likelihood that the Federal Reserve will be able to lower interest rates even as growth holds up. Rate cuts with good growth is a rare occurrence, but when you do get it, it can be extremely good. If one thinks of the mid-1990s, another time where we had this combination, credit spreads were even tighter than current levels. Another path to the bull case is better funding conditions in the market. Some loosening of bank capital requirements or stronger demand for collateralized loan obligations could both flow through to tighter spreads for the assets that these fund,…

18. Fed Signals Inflation Fight Isn’t Over

    20 december 2024 · 9 min

    Afspelen
    Our Global Head of Macro Strategy joins our Chief U.S. Economist to discuss the Fed’s recent rate cut and why persistent inflation is likely to slow the pace of future cuts. Lees meer

    ----- Transcript -----

    Matthew Hornbach: Welcome to Thoughts on the Market. I'm Matthew Hornbach, Global Head of Macro Strategy.

    Michael Gapen: And I'm Michael Gapen, Morgan Stanley's Chief U.S. Economist.

    Matthew: Today, we're going to talk about the Federal Open Market Committee meeting and the path for rates from here.

    It's Thursday, December 19th at 10a.m. in New York.

    The FOMC meeting concluded yesterday with the Federal Reserve cutting rates by a quarter of a percentage point, marking the third rate cut for the year. This move by the Fed was just as the consensus had anticipated. However, in its meeting yesterday, the Fed indicated that 2025 rate cuts would happen at a slower pace than investors were expecting. So Mike, what are committee members projecting in terms of upcoming rate cuts in 2025 and 2026?

    Michael: Yeah, Matt, the Fed dialed back its expectations for policy rate easing in both 2025 and 2026. They now only look for two rate cuts of 50 basis points worth of cuts in 2025, which would bring the funds rate to 3.9% and then only another 50 basis points in 2026, bringing the policy rate to 3.4%. So a major dialing back in their expectations of rate cuts over the next two years.

    Matthew: What are the factors that are driving what now appears to be a slightly less dovish view of the policy rate?

    Michael: Chair Powell mentioned, I think, two things that were really important. One, he said that many committee members saw recent firmness in inflation as a surprise. And so I think some FOMC members extrapolated that strength in inflation going forward and therefore thought fewer rate cuts were appropriate. But Chair Powell also said other FOMC members incorporated expectations about potential changes in policy, which we inferred to mean changes about tariffs, immigration polic…

19. Banking on Deregulation

    18 december 2024 · 4 min

    Afspelen
    Of all of the potential policy changes from the incoming U.S. presidential administration, deregulation could have the most significant impact on markets. Our Chief Fixed Income Strategist explains what’s coming. Lees meer

    ----- Transcript -----

    Welcome to Thoughts on the Market. I am Vishy Tirupattur, Morgan Stanley's Chief Fixed Income Strategist. Today I'll be discussing the policy changes that we have the highest conviction in terms of their market impact.

    It's Wednesday, December 18th at 10 a.m. in New York.

    As our regular readers are aware, Morgan Stanley strategists and economists around the globe came together to formulate our outlook for 2025 across the wide range of markets and economies we cover. A key aspect of this year's outlook is the potential for policy changes ahead from the incoming administration. The substance, severity, and sequencing of policies will matter and will have an important bearing on how markets perform over the course of 2025. We would put the potential range of policy changes into four broad categories: Tariffs and Trade Policy; Immigration Controls; Tax Cuts and Fiscal Policy; and finally, Deregulation. In terms of sequencing, our central case is for tariffs to go first and tax cuts to be last. As our public policy team sees it, the incoming administration will see fast announcements but a slow implementation of policy, especially in terms of tariffs and immigration. Slower implementation will mean that the changes will also be slow and the impacts on the economy and markets likely to be a lot more gradual.

    That said, it is in the area of deregulation that we expect to see the highest impact on markets, even though precise measurement of these impacts in terms of macroeconomic indicators such as growth and inflation is hard to come through. So with deregulation, we expect an environment in support of bank activity. As our bank equity analysts have noted, banks in their coverage area currently are sitting on record levels of excess ca…

20. The Calm Before the Storm?

    17 december 2024 · 5 min

    Afspelen
    Our Global Chief Economist explains why a predictable end to 2024 for central banks may give way to a tempestuous 2025. Lees meer

    ----- Transcript -----

    Welcome to Thoughts on the Market. I'm Seth Carpenter, Morgan Stanley's Global Chief Economist, and today I'll be talking about how the year end is wrapping up with, surprisingly, a fair amount of certainty about central banks.

    It's Tuesday, December 17th at 10 a. m. in New York.

    Unlike the rest of this past year, year end seems to have a lot more certainty about the last few central bank meetings. Perhaps it is just the calm before the storm, but for now, let's enjoy a benign central bank week ahead of the holidays. Last Thursday, the ECB cut interest rates 25 basis points, right in line with what we were thinking and what the market was thinking. Similarly, but I have to say, with a pretty different narrative, we expect the Fed to cut 25 basis points this week and the market seems to be all in there as well.

    The Bank of England, the Bank of Japan, well, we think they're closed accounts; that is to say, they're going to be on pause until the new year. Last week's 25 basis point cut by the ECB came amidst a debate as to whether or not the ECB should accelerate their pace of rate cuts. With most doubts about disinflation resolved, it’s downside growth risks that have gained prominence in the decision making process there. Restrictive monetary policy is starting to look less and less necessary and President Lagarde’s statement seems to reflect that the council's negotiated stance, that easing will continue until the ECB reaches neutral. The question is what happens next? In our view, the ECB will come to see there's a need to cut through neutral and get all the way down to 1%.

    In stark contrast, there's the Fed, where there are very few residual growth concerns, but there have been more and more questions about the pace of disinflation. The recent employment data, for example, clearly suggests that the recession risk is …

21. How Investors Can Best Position for 2025

    16 december 2024 · 4 min

    Afspelen
    Our CIO and Chief U.S. Equity Strategist recaps how equity markets have fared in 2024, and why they might look more conservative early in the new year. Lees meer

    ----- Transcript -----

    Welcome to Thoughts on the Market. I'm Mike Wilson, Morgan Stanley’s CIO and Chief US Equity Strategist. Today on the podcast I’ll be discussing how to position as we head into the new year.

    It's Monday, Dec 16th at 11:30am in New York. So let’s get after it.

    The big question for most investors trying to beat the S&P 500 is whether returns will continue to be dominated by the Magnificent 7 and a few other high quality large cap stocks or if we're going to will see a sustainable broadening out of performance to new areas. Truth be told, 2024 has been a year during which investors have oscillated between a view of broadening out or continued narrowing. This preference has coincided with the ever-changing macro view about growth and inflation and how the Fed would respond.

    To recount this past year, our original framework suggested investors would have to contend with markets reacting to these different macro-outcomes. More specifically, whether the economy would end up in a soft landing, a hard landing or a “no landing” outcome of accelerating growth and inflation. Getting this view right helped us navigate what kinds of stocks, sectors and factors would outperform during the year. The perfect portfolio this year would have been overweight broad cyclicals like energy, industrials and financials in the first quarter, followed by a Magnificent 7 tilt in early 2Q that got more defensive over the summer before shifting back toward high quality cyclicals in late third quarter. Lately, that cyclical tilt has included some lower quality stocks while the Magnificent 7 has had a big resurgence in the past few weeks. We attributed these shifts to the changing perceptions on the macro which have been more uncertain than normal.

    Going into next year, I think this pattern continues, and it currently ma…

22. Why the Airline Industry Could Take Off in 2025

    13 december 2024 · 4 min

    Afspelen
    After an up-and-down 2024 for the U.S. airlines industry, our Freight Transportation & Airlines Analyst Ravi Shanker explains why he is bullish about the sector’s trajectory over the next year. Lees meer

    ----- Transcript -----

    Welcome to Thoughts on the Market. I’m Ravi Shanker, Morgan Stanley’s Freight Transportation and Airlines analyst. Today I’ll discuss why we remain bullish on the US Airlines industry for 2025.

    It’s Friday, December 13, at 10am in New York.

    The Airline industry entered 2024 with good momentum, lost it during the middle of the year with some concerns around the economy and capacity, but then turned it around in the fall to finish the year with the strongest run that the Airlines have had since the pandemic. The coast looks clear for 2025, and we remain bullish on the US Airlines for next year.

    While many airline stocks enter 2025 close to post-pandemic if not all-time highs, valuations are still attractive enough across the space to see upside across the industry. The big question right now is: will the focus on premium services continue to pay off, or will there be a resurgence in domestic travel that alters the market dynamics? We think the answer is both.

    Premium beneficiaries will continue to shine in 2025. We believe the premiumization trend in the industry is structural and will continue next year. Legacy carriers have successfully capitalized on this trend, enhancing their revenue streams significantly through upgraded service offerings such as premium seating and lounge access. This move isn't just about luxury—it's a calculated play to boost ancillary revenues, which are becoming a more critical component of financial stability in the airline industry. The premium leaders are building annuity-like business models – think razorblades, printers or smartphones – where the sale of a popular gateway product is followed by the bulk of the profitability coming from ancillary revenues generated in the following years, as loyalty and adjacent reve…

23. Could Private-Label Products Transform Retail?

    12 december 2024 · 5 min

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    Our U.S. Retail Analyst Simeon Gutman discusses shoppers’ embrace of a private labels super cycle and how changing consumer behavior could fundamentally change grocery and discount retailers. Lees meer

    ----- Transcript -----

    Welcome to Thoughts on the Market. I’m Simeon Gutman, Morgan Stanley’s US Hardlines, Broadlines and Food Retail Analyst. Today, we’ll talk about a fascinating shift in the retail landscape: the rise of private label products and what this could mean for the future of grocery and discount retailers.

    It’s Thursday, December 12, at 10am in New York.

    Think about your recent trip to your favorite grocery store. As you reached towards the shelves for your preferred brand of mayonnaise, frozen pizza, or bread, you may have noticed that more and more shelves are stocked with store-brand products. Products that not only match the quality of national brands but often exceed it. This isn't just a minor trend. We estimate private label sales growth will accelerate by 40 per cent to reach $462 billion by 2030. An expansion that will redefine market dynamics significantly.

    In essence, we think the private label grocery market is on the cusp of a super cycle. This super cycle is a by-product of COVID-era shifts in the way that customers shop and how retailers invest into this trend. At the same time, private label groceries reflect the rise of mega platforms, which are taking ever greater consumer wallet share and are innovating more than ever before.

    When you look at macro drivers, US consumers have been navigating a difficult post-COVID environment. While inflation is currently moderating, overall food prices remain 30-34 per cent above their 2018 levels. Most consumers are spending more on food at home vs. food away from home, which is a positive catalyst for private label acceleration. Further, consumers are willing to substitute lower priced goods, especially groceries, and these categories present a growth opportunity for private labels. This is the tipping…

24. What Could Go Wrong for Corporate Credit?

    11 december 2024 · 4 min

    Afspelen
    Our Head of Corporate Credit Research Andrew Sheets explains why corporate credit may struggle in 2025, including the risks of aggressive policy shifts in the U.S. along with political and structural challenges in Europe and Asia. Lees meer

    ----- Transcript -----

    Welcome to Thoughts on the Market. I'm Andrew Sheets, head of Corporate Credit Research at Morgan Stanley. Today I’ll be discussing realistic scenarios where things are worse than we expect. Next week, I’ll cover what could be better.

    It's Wednesday, December 11th at 2pm in London.

    Morgan Stanley strategists and economists recently completed our forecasting process for the year ahead, and regular listeners will have now heard our expectations across a wide range of economies and markets. But I’d stress that these forecasts are a central case. The world is uncertain, with a probability distribution around all forecasts. So in the case of credit, what could go wrong?

    As a quick reminder, our baseline for credit is reasonably constructive. We think that low credit spreads can remain low, especially in the first half of next year – as policy change is slow to come through, economic data holds up, the Fed and European Central Bank ease rates more than expected, and still-high yields on corporate bonds attract buyers.

    So how does all of that go wrong? Well, there are a few specific, realistic factors that could lead us to something worse, i.e., our bear case.

    Let me start with US policy. Morgan Stanley’s Public Policy team’s view is that the incoming US administration will see fast announcement, but slow implementation on key issues like tariffs, fiscal policy, and immigration; and that that slower implementation of any of these policies will mean that change comes less quickly to the economy. But that change could happen faster, which would mean weaker growth and higher prices – if, for example, tariffs were to hit earlier and or in larger size. In the case of immigration, we are actually still forecasting positiv…

25. How Equity Markets Are Feeling About 2025

    10 december 2024 · 5 min

    Afspelen
    Our CIO and Chief U.S. Equity Strategist says that while equity market activity suggests a measured level of optimism about 2025, the questions around tariffs and inflation have tempered expectations. Lees meer

    ----- Transcript -----

    Welcome to Thoughts on the Market. I'm Mike Wilson, Morgan Stanley’s CIO and Chief US Equity Strategist. Today on the podcast I will be discussing how equity markets have traded post the election and how this fits with our thinking.

    It's Tuesday, Dec 10 at 11:30am in New York. So let’s get after it.

    Post the election, our focus has been on the potential for a rebound in animal spirits like we observed following the 2016 election. During that historical period, we saw a broad-based surge in corporate, consumer and investor confidence as the sentiment analysis we’ve done shows. So far over the last month, sentiment data has reflected a more measured level of optimism led by small business confidence while services related business outlooks were actually tempered somewhat.

    Our assessment of the details of these surveys and commentary from corporates suggests that consumers and companies are feeling more optimistic heading into 2025. But the uncertainty around tariffs and the still elevated price levels are likely holding back the type of exuberance we saw post the 2016 election.

    In 2016, we were also coming out of an industrial/manufacturing downturn, which was then aided by aggressive China stimulus. Due to that downturn, interest rates were much lower globally and sovereign deficits and balance sheets were in much better shape to absorb reflationary type policies like tax cuts and deregulation. As a result, the equity market almost immediately embraced an expansionary fiscal agenda that was interpreted as being pro-growth. Today, that policy agenda appears to be less front-footed in this regard, perhaps due to some of these constraints.

    Nevertheless, these dynamics are still supportive of our preference for more cyclical sectors. However, …

26. How AI Is Revolutionizing Healthcare

    9 december 2024 · 13 min

    Afspelen
    Morgan Stanley Research and Investment Management analysts discuss how AI can keep costs down for the industry and give patients a more personalized experience. Lees meer

    ----- Transcript -----

    Craig Hettenbach: Welcome to Thoughts on the Market. I'm Craig Hettenbach, Morgan Stanley's U.S. Healthcare Technology and Providers analyst.

    Today I'm here with my colleague Steve Rodgers from Morgan Stanley Capital Partners to talk about a growing and underappreciated segment of healthcare – the behind-the-scenes technology that is transforming the sector to keep costs down and improve patient care.

    It's Monday, December 9th at 9am in New York.

    In 2022, the size of the U.S. healthcare sector was [$]4.5 trillion and is projected to grow to [$]6.8 trillion in 2030, accounting for 20 per cent of overall U.S. GDP. We know that the U.S. population is aging, and we expect to see 71 million U.S. citizens age 65 and over by 2030. That puts ever growing demand on health care systems.

    So, Steve, you and your colleagues in investment management have been looking lately at key macro trends driving change in the healthcare sector.

    What are these drivers and how do they work together?

    Steve Rodgers: When we look at the health care landscape, we really think about four major macro trends. The first is cost containment. And this is just this simple idea that costs are escalating at an unsustainable rate. The second is demographics; we also know that things like obesity is increasing the prevalence of chronic conditions and increasing the overall utilization of the healthcare system. And so, we're looking at ways to invest behind that macro trend.

    We've also identified something called consumerism. And consumerism stems from the reality that today, patients are taking more of a financial responsibility in their healthcare. And with that comes more decision making. So, the old days – where the patient received healthcare services, but the payer paid, and there was really no link between the …

27. A Very Merry Start to U.S. Holiday Shopping

    6 december 2024 · 9 min

    Afspelen
    Morgan Stanley Research analysts see a strong start following Black Friday but question whether the short shopping season will hurt retailers. Lees meer

    ----- Transcript -----

    Michelle Weaver: Welcome to Thoughts on the Market. I'm Michelle Weaver, Morgan Stanley's U.S. Thematic and Equity Strategist.

    Simeon Gutman: I'm Simeon Gutman, U.S. Hardlines, Broadlines, and Food Retail analyst.

    Alex Straton: And I'm Alex Straton, North America Softlines, Retail, and Brands analyst.

    Michelle Weaver: Thanksgiving and Black Friday are behind us; and now that the holiday shopping season is in full swing, we have some interesting new data we wanted to dig into. We also recently concluded Morgan Stanley's Global Consumer and Retail Conference in New York, and we'll share some key takeaways from that.

    It's Friday, December 6th at 10am in New York.

    I was recently on the show to talk about our holiday shopping outlook and survey takeaways, and noted that overall, we're expecting stronger spending this holiday season relative to last year. Inflation's cooled, and U.S. consumers are more positive on spending this season versus the past two holiday seasons. Now that we've got Black Friday in the rearview mirror, Simeon, within your space, how's holiday season tracking so far?

    Simeon Gutman: Better. And the three key metrics – traffic, physical store sales, digital sales – all seem to be tracking better. The question is the magnitude and the length of ahead that the entire industry is – and what does that give us through the rest of the season? As we all know, the holiday season, shopping season is shorter; with the later fall of Thanksgiving, we're losing a weekend. The tone at our conference affirmed all of this, all the data points we heard were pretty upbeat. And it seems like the weather couldn't have broken at a better time, which is different from the October lead up to holiday.

    So, it seems like we're off to a pretty healthy start. I think there's some questions of what do we ma…

28. AI as a Second Set of Eyes

    6 december 2024 · 4 min

    Afspelen
    Our Europe MedTech Analyst digs into the transformational impact of AI-driven diagnostic imaging on healthcare systems. Lees meer

    ----- Transcript -----

    Welcome to Thoughts on the Market, I’m Robert Davies, Morgan Stanley’s Head of the Europe MedTech research team. Today I want to take you behind the scenes to show you how AI is revolutionizing our approach to medical diagnostics via Smart Imaging.

    It’s Thursday, December 5, at 10 AM in Boston.

    When was the last time you needed to get an X-Ray, a CT scan, or an ultrasound? Depending on where you live, your wait time could be as long as a month.

    Medical diagnostics through imaging is facing enormous challenges right now. Population growth, rising longevity, and intensifying chronic disease burdens are driving ever increasing volumes of medical scans. In the U.S. alone, CT scan volumes have quadrupled since 1995. So, what is the impact of this? Imagine a radiologist interpreting a CT or MRI image every 3-4 seconds during an eight-hour workday. This is the current pace needed to meet the soaring demand.

    At the same time, the U.S. population is getting older and a growing number of people are signing up for Medicare. Healthcare costs are continually rising, total U.S. healthcare spend is now hitting $4.5 trillion. That's nearly 20% of U.S. GDP. On top of that, patients need fast, accurate diagnosis. But long wait times often mean that patients don’t get the diagnostic done in time or sometimes not at all. All of this indicates that more and more stress is being placed on hospital systems each year in terms of diagnostic imaging.

    Smart Imaging uses AI tools to improve imaging processing and workflows to enhance traditional image gathering, processing, and analysis. It sits at the intersection of Longevity and Tech Diffusion, two of Morgan Stanley Research’s big themes for 2024. And it can help solve these acute demand challenges. In fact, AI is already transforming the $45 billion Diagnostic Imaging market.

    AI-driven Smar…

29. What Investors Should Know About Trump’s Tariffs

    4 december 2024 · 4 min

    Afspelen
    Our Global Head of Fixed Income and Thematic Research explains why President-elect Trump’s proposed tariff plans may look different than the policies that are ultimately put in place. Lees meer

    ----- Transcript -----

    Welcome to Thoughts on the Market. I’m Michael Zezas, Morgan Stanley’s Global Head of Fixed Income and Thematic Research. Today on the podcast I'll be talking about what investors need to know about tariffs.

    It’s Wednesday, Dec 4, at 2 pm in London.

    There’s still over a month before Trump takes office again. But in the meantime he’s started sending messages about his policy plans. Most notably, for investors, he’s started talking about his ideas for tariffs. He’s floated the idea of tariffs on all imports from China, Mexico, and Canada. He’s talked about tariffs on all the BRICs countries unless they publicly dismiss the idea of pursuing an alternative reserve currency to the US dollar. In short, he’s talking about tariffs a lot.

    While we certainly don’t dismiss Trump’s sincerity in suggesting these tariffs, nor the ability for a President to execute on tariffs like these – well, mostly anyway – it’s important for investors to know that the ultimate policies enacted to address the concerns driving the tariff threats could look quite different than what a literal interpretation of Trump’s words might suggest. After all, there are plenty of examples of policies enacted on Trump’s watch that address his concerns that were not implemented exactly as he initially suggested.

    The Tax Cuts and Jobs act is a good example, where Trump advocated for a 15 percent corporate tax rate but signed a bill with a 21 percent tax rate. Another is the exceptions process for the first round of China tariffs, where some companies got exceptions based on modest onshoring concessions. These examples speak to the idea that procedural, political, and economic considerations can shape policy in a way that’s different from what’s initially proposed.

    This is why our base case for the U…

30. Private vs. Public Credit Competition Intensifies

    4 december 2024 · 7 min

    Afspelen
    Our Chief Fixed Income Strategist Vishy Tirupattur and Leveraged Finance Strategist Joyce Jiang discuss how the dynamic between private and public credit markets will evolve in 2025, and how each can find their own niches for success. Lees meer

    ----- Transcript -----

    Vishy Tirupattur: Welcome to Thoughts on the Market. I am Vishy Tirupattur, Morgan Stanley's Chief Fixed Income Strategist. Today we'll be talking about how private credit has evolved over 2024 and the outlook for 2025. I'm joined by my colleague, Joyce Jiang, from our Leveraged Finance Strategy team.

    It's Tuesday, December 3rd at 10am in New York.

    A lot has happened over 2024 in private credit. We are credit people. Let's talk about defaults and returns. How has 2024 been thus far for private credit in terms of defaults and returns?

    Joyce Jiang: It's always tricky to talk about defaults in private credit because the reported measures tend to vary a lot depending on how defaults are defined and calculated. Using S&P's credit estimate defaults as a proxy for the overall private credit defaults, we see that defaults appear to have peaked, and the peak level was significantly lower than during the COVID cycle.

    Since then, defaults have declined and converged to levels seen in public loans. In this cycle, the elevated policy rates have clearly weighed on the credit fundamentals, but direct lenders and sponsors have worked proactively to help companies extending maturities and converting debt into PIK loans. Also, the high level of dry powder enabled both private credit and PE funds to provide liquidity support, keeping default rates relatively contained.

    From a returns perspective for credit investors, the appeal of private credit comes from the potential for higher and more stable returns, and also its role as a portfolio diversifier. Data from Lincoln International shows that over the past seven years, direct lending loans have outperformed single B public loans in total return terms by approximately 2.3 pe…

31. Will 2025 Be a Turning Point for Credit?

    2 december 2024 · 4 min

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    Our Head of Corporate Credit Research Andrew Sheets recaps an exceptional year for credit — but explains why 2025 could be a more challenging year for the asset class. Lees meer

    ----- Transcript -----

    Welcome to Thoughts on the Market. I'm Andrew Sheets, head of Corporate Credit Research at Morgan Stanley. Today I’ll be discussing the Outlook for global Credit Markets in 2025.

    It’s Monday, Dec 2nd at 2 pm in London.

    Morgan Stanley Strategists and Economists recently completed our forecasting process for the year ahead. For Credit, 2025 looks like a year of saying goodbye.

    2024 has been an exceptionally good environment for credit. As you’ve probably grown tired of hearing, credit is an asset class that loves moderation and hates extremes. And 2024 has been full of moderation. Moderate growth, moderating inflation and gradual rate cuts have defined the economic backdrop. Corporates have also been moderate, with stable balance sheets and still-low levels of corporates buying each other despite the strong stock market.

    The result has been an almost continuous narrowing of the extra premium that companies have to pay relative to governments, to some of the lowest, i.e. best spread levels in over 20 years.

    We think that changes. The U.S. election and resulting Republican sweep have now ushered in a much wider range of policy outcomes – from tariffs, to taxes, to immigration. These policies are in turn driving a much wider range of economic outcomes than we had previously, to scenarios that include everything from much greater corporate optimism and animal spirits, to much weaker growth and higher inflation, under certain scenarios of tariffs and immigration.

    Now, for some asset classes, this wider range of outcomes may simply be a wash, balancing out in the aggregate. But not for credit. This asset class doesn’t stand to return more if corporate activity booms; but it stands to still lose if growth slows more than expected. And given the challenges that tariffs could pose…

32. Special Encore: The Beginning of an M&A Boom?

    29 november 2024 · 4 min

    Afspelen
    Original Release Date November 15, 2024: Our head of Corporate Credit Research Andrew Sheets explains why a stronger economy, moderate inflation and future rate cuts could prompt deal-making. Lees meer

    ----- Transcript -----

    Welcome to Thoughts on the Market. I'm Andrew Sheets, head of Corporate Credit Research at Morgan Stanley. Today I’ll discuss why we remain believers in a large, sustained uptick in corporate activity.

    It's Friday, November 15th at 2pm in London.

    We continue to think that 2024 will mark the start of a significant, multiyear uplift in global merger and acquisition activity – or M&A. In new work out this week, we are reiterating that view. While the 25 percent rise in volumes this year is actually somewhat short of our original expectations from March, the core drivers of a large and sustained increase in activity, in our view, remain intact.

    Those drivers remain multiple. Current levels of global M&A volumes are still unusually low relative to their own historical trend or the broader strength that we see in stock markets. The overall economy, which often matters for M&A activity, has been strong, especially in the US, while inflation continues to moderate and rate cuts have begun. We see motivations for sellers – from ageing private equity portfolios, maturing venture capital pipelines, and higher valuations for the median stock. And we see more factors driving buyers from $4 trillion of private market "dry powder," to around $7.5 trillion of cash that's sitting idly on non-financial balance sheets, to wide-open capital markets that provide the ability to finance deals.

    These high level drivers are also confirmed bottom up by boots on the ground. Our colleagues across Morgan Stanley Equity Research also see a stronger case for activity – and we polled over 60 global equity teams for their views. While the results vary by geography and sector, the Morgan Stanley Equity analysts who cover these sectors in the most depth also see a strong case for mor…

33. Special Encore: How Young People Think About Money

    27 november 2024 · 4 min

    Afspelen
    Original Release Date November 1, 2024: Our US Fintech and Payments analyst reviews a recent survey that reveals key trends on how Gen Z and Millennials handle their personal finances. Lees meer

    ----- Transcript -----

    Welcome to Thoughts on the Market. I’m James Faucette, Morgan Stanley’s Head of US Fintech and Payments. Today I’ll dig into the way young people in the US approach their finances and why it matters.

    It’s Friday, November 1st, at 10am in New York.

    You’d think that Millennials – also commonly known as Gen Y – and Gen Z would come up with new ways to think about money. After all, they live most of their lives online, and don’t always rely on their parents for advice – financial or otherwise. But a survey we conducted suggests the opposite may be true.

    To understand how 16 to 43 year-olds – who make up nearly 40 per cent of the US population – view money, we ran an AlphaWise survey of more than 4,000 US consumers.

    In general, our work suggests that both Millennials and Gen Z’s financial goals, banking preferences, and medium-term aspirations are not much different from the priorities of previous generations. Young consumers still believe family is the most important aspect in life, similar to what we found in our 2018 survey. They have a positive outlook on home ownership, college education, employment, and their personal financial situation. 28-to-43-year-olds have the second highest average annual income among all age cohorts, earning more than $100,000. They spend an average of $86,000 per year, of which more than a third goes toward housing.

    Gen Y and Z largely expect to live in owned homes at a greater rate in five to 10 years, and younger Gen Y cohorts' highest priority is starting a family and raising children in the medium term. This should be a tailwind for many consumer-facing real estate property sectors including retail, residential, lodging and self-storage. However, Gen Y and Z are less mobile today than they were pre-pandemic. Compared to the…

34. Uncertainty Surrounds 2025 U.S. Equities Outlook

    26 november 2024 · 11 min

    Afspelen
    Morgan Stanley’s CIO and Chief U.S. Equity Strategist Mike Wilson joins Andrew Pauker of the U.S. Equity Strategy team to break down the key issues for equity markets ahead of 2025, including the impact of potential deregulation and tariffs. Lees meer

    ----- Transcript -----

    Mike Wilson: Welcome to Thoughts on the Market. I'm Mike Wilson, Morgan Stanley’s CIO and Chief US Equity Strategist.

    Andrew Pauker: And I'm Andrew Pauker from our US Equity Strategy Team.

    Mike Wilson: Today we'll discuss our 2025 outlook for US equities.

    It's Tuesday, November 26th at 5pm.

    So let's get after it.

    Andrew Pauker: Mike, we're forecasting a year-end 2025 price target of 6,500 for the S&P 500. That's about 9 percent upside from current levels. Walk us through the drivers of that price target from an earnings and valuation standpoint.

    Mike Wilson: Yeah, I mean, I think, you know, this is really just rolling forward what we did this summer, which is we started to incorporate our economists’ soft-landing views. And, of course, our rate strategist view for 10-year yields, which, you know, factors into valuation.

    We really didn't change any of our earnings forecast. That's where we've been very accurate. What we've been not accurate is on the multiple. And I think a lot of clients have also -- investors -- have been probably a little bit too conservative on their multiple assumption. And so, we went back and looked at, you know, periods when earnings growth is above average, which is what we're expecting. And that's just about 8 percent; anything north of that. Plus, when the Fed is actually cutting rates, which was not the case this past summer, it's just very difficult to see multiples go down. So, we actually do have about 5 percent depreciation in our multiple assumption on a year-over-year basis, but still it's very high relative to history.

    But if the base case plays out, but from an economic standpoint and from a rate standpoint, it's unlikely earnings rates are going to come down.…

35. US Holiday Shoppers Spend More on Smaller Items

    25 november 2024 · 4 min

    Afspelen
    As Black Friday approaches, our US Thematic and Equity Strategist Michelle Weaver explains why some US consumers will increase their spending and which industries could benefit. Lees meer

    ----- Transcript -----

    Michelle Weaver: Welcome to Thoughts on the Market. I'm Michelle Weaver, US Thematic and Equity Strategist. The holiday season is just around the corner, and today I'll be discussing what US consumers are planning for this year's holiday shopping.

    It's Monday, November 25th at 10am in New York.

    It's that time of year when New York City goes from skyscrapers to sky high trees. So, cue the holiday music, holiday shopping season is here. My colleagues Jim Egan, Arunima Sinha, and Heather Berger recently came on this show to discuss the current state of the US Consumer. Today, I want to expand a little bit on their analysis by looking specifically at how holiday shopping could fare this year.

    Overall, consumer spending trends have been robust year to date, which does bode well for holiday spending. We recently ran a proprietary survey of around 2000 US Consumers that showed a more positive outlook for holiday shopping this year versus in 2023 and 2022. Not surprisingly, though, higher income households – who've really been the key drivers of aggregate consumer spending – are likely to drive the spending this holiday season as well.

    Overall, we expect to see increased holiday budgets this year. Our survey found that 37 percent of US consumers are planning to keep their holiday budgets roughly the same as last year. Around 35 percent are expecting to spend more and 22 percent are expecting to spend less. So, this yields a net gain of around +13 percent. It's not off to the races, though, and consumers will continue to be selective on where they're planning to allocate their dollars.

    Discounts and promotions are going to have an impact on shoppers. And in fact, if retailers don't offer discounts, 44 percent of shoppers say they may pull back or trade down somewhat, an…

36. Will US Tariffs Drive Mexico Closer to China?

    22 november 2024 · 9 min

    Afspelen
    Our US Public Policy Strategist Ariana Salvatore and Chief Latin America Equity Strategist Nikolaj Lippmann discuss what Trump’s victory could mean for new trade relationships. Lees meer

    ----- Transcript -----

    Ariana Salvatore: Welcome to Thoughts on the Market. I'm Ariana Salvatore, Morgan Stanley's US Public Policy Strategist.

    Nikolaj Lippmann: And I'm Nik Lippmann, Morgan Stanley's Chief Latin American Equity Strategist.

    Ariana Salvatore: Today, we're talking about the impact of the US election on Mexico's economy, financial markets, and its trade relationships with both the US and China.

    It's Friday, November 22nd at 10am in New York.

    The US election has generated a lot of debate around global trade, and now that Trump has won, all eyes are on tariffs. Nik, how much is this weighing on Mexico investors?

    Nikolaj Lippmann: It’s interesting because there's kind of no real consensus here. I'd say international and US investors are generally rather apprehensive about getting in front of the Trump risk in Mexico; while, interestingly enough, most Mexico-based investors and many Latin American investors think Trump is kind of good news for Mexico, and in many cases, even better news than Biden or Harris. Net, net, Mexican peso has sold off. Mexico's now down 25 per cent in dollar terms year to date, while it was flat to up three, four, 5 per cent around May. So, we've already seen a lot being priced then.

    Ariana, what are your expectations for Trump's trade policy with regards to Mexico?

    Ariana Salvatore: So, Mexico has been a big part of the trade debate, especially as we consider this question of whether or not Mexico represents a bridge or a buffer between the US and China. On the tariff front, we've been clear about our expectations that a wide range of outcomes is possible here, especially because the president can do so much without congressional approval.

    Specifically on Mexico, Trump has in the past threatened an increase in exchange for certain policy concess…

37. Is This the Future of Clean Energy Under Trump 2.0?

    21 november 2024 · 8 min

    Afspelen
    Our Sustainability analysts Stephen Byrd and Laura Sanchez discuss the range of impacts that the Republican sweep may have on energy policy and the ESG space. Lees meer

    ----- Transcript -----

    Stephen Byrd: Welcome to Thoughts on the Market. I'm Stephen Byrd, Morgan Stanley's Global Head of Sustainability Research and Head of Research Product for the Americas.

    Laura Sanchez: And I'm Laura Sanchez, Head of Sustainability Equity Research for the Americas.

    Stephen Byrd: Today, Laura and I will talk about the potential impact of the next Trump administration on the US energy transition, and on the US ESG Investing landscape.

    It's Thursday, November 21st at 8 am in New York.

    Now that Donald Trump has been re-elected, all eyes are on potential changes to the Inflation Reduction Act or IRA. So Laura, what are your expectations and on what kind of timeframe?

    Laura Sanchez: There has been a lot of dialogue internally between our clean tech and public policy teams exactly on this question, Stephen. Basically, we continue to believe that a full repeal of the IRA is unlikely because a significant amount of investment has gone to Republican states that has in turn driven a good amount of good paying jobs. On the back of this, we have seen a large number of Republican legislators, as well as large oil and gas companies, write letters to high members of Congress supporting portions of the IRA.

    Now, unfortunately, that doesn't mean that it won't be noisy. We do think that a partial repeal is likely, potentially a rebranding, and/or a clear phase out of the tax credits, by, let's say, the end of the decade.

    It will take some time to get clarity around what's in and what's out to the second part of your question. We believe clarity on final changes is likely by the end of 2025 at the earliest, which is when the TCJA, or the Tax Cuts and Jobs Act, is set to expire. And so, a lot of tax related conversations and concessions will happen then.

    Lastly, a point that I want to make here is …

38. Is Clean Power at a Tipping Point in Asia?

    20 november 2024 · 4 min

    Afspelen
    Our South Asia Energy Analyst Mayank Maheshwari discusses the main drivers behind a shifting electric power landscape in his outlook for Asia energy. Lees meer

    ----- Transcript -----

    Welcome to Thoughts on the Market. I’m Mayank Maheshwari, Morgan Stanley’s South Asia Energy Analyst.

    There’s been an investment surge in renewable energy – to field the world’s rising demands for energy and power. With a new White House administration, however, there are questions about its future. Today I want to dig into the profound shifts impacting the production and consumption of power in Asia.

    It’s Wednesday, November 20, at 9pm in Singapore.

    The world consumed 25 trillion units of power last year and Asia accounted for about half of that. Asia demand is booming like the rest of the world, and power consumption is at a tipping point. We forecast global power consumption will grow 26 per cent faster through 2030 than in the last decade. Somewhat similar to the US, we are actually seeing tightness in Asian power markets in coming years as well. But even today countries like India, Singapore, and increasingly Malaysia are seeing power demand grow at 1.5 to 2x faster than pre-COVID levels.

    So, what’s driving this rapid growth? Outside of the residential power demand, growth is driven by GenAI datacenters, re-shoring of manufacturing facilities, there are new semi-conductor investments that are coming through, and expanding new energy supply chains itself are actually adding to the tightness.

    Importantly though, regional differences in clean power costs and demand are stark. In Asia, power prices have steadily risen. Multiple regulators are acknowledging the tightness by extending the life of coal plants, building new gas and coal facilities, and even restarting nuclear power generation capacity – as clean power alone cannot by itself handle this surge in demand.

    Interestingly though, the cost to produce clean power has declined pretty rapidly in 2024 to below-trend levels after a per…

39. Global Outlook: Housing, Currency Markets in Focus

    19 november 2024 · 12 min

    Afspelen
    On the second part of a two-part roundtable, our panel gives its 2025 preview for the housing and mortgage landscape, the US Treasury yield curve and currency markets. Lees meer

    ----- Transcript -----

    Vishy Tirupattur: Welcome to Thoughts on the Market. I am Vishy Tirupattur, Morgan Stanley's Chief Fixed Income Strategist. This is part two of our special roundtable discussion on what's ahead for the global economy and markets in 2025.

    Today we will cover what is ahead for government bonds, currencies, and housing. I'm joined by Matt Hornbach, our Chief Macro Strategist; James Lord, Global Head of Currency and Emerging Market Strategy; Jay Bacow, our co-head of Securitized Product Strategy; and Jim Egan, the other co-head of Securitized Product Strategy.

    It's Tuesday, November 19th, at 10am in New York.

    Matt, I'd like to go to you first. 2024 was a fascinating year for government bond yields globally. We started with a deeply inverted US yield curve at the beginning of the year, and we are ending the year with a much steeper curve – with much of that inversion gone. We have seen both meaningful sell offs and rallies over the course of the year as markets negotiated hard landing, soft landing, and no landing scenarios.

    With the election behind us and a significant change of policy ahead of us, how do you see the outlook for global government bond yields in 2025?

    Matt Hornbach: With the US election outcome known, global rate markets can march to the beat of its consequences. Central banks around the world continue to lower policy rates in our economist baseline projection, with much lower policy rates taking hold in their hard landing scenario versus higher rates in their scenarios for re-acceleration.

    This skew towards more dovish outcomes alongside the baseline for lower policy rates than captured in current market prices ultimately leads to lower government bond yields and steeper yield curves across most of the G10 through next year. Summarizing the regions, we expe…

40. Global Outlook: What’s Ahead for Markets in 2025?

    19 november 2024 · 10 min

    Afspelen
    On the first part of a two-part roundtable, our panel discusses why the US is likely to see a slowdown and where investors can look for growth. Lees meer

    ----- Transcript -----

    Vishy Tirupattur: Welcome to Thoughts on the Market. I'm Vishy Tirupattur, Morgan Stanley's Chief Fixed Income Strategist. Today in the podcast, we are hosting a special roundtable discussion on what's ahead for the global economy and markets in 2025.

    I'm joined by my colleagues: Seth Carpenter, Global Chief Economist; Mike Wilson, Chief US Equity Strategist and the firm's Chief Investment Officer; and Andrew Sheets, Global Head of [Corporate] Credit Research.

    It's Monday, November 18th, at 10am in New York.

    Gentlemen. Thank you all for taking the time to talk. We have a lot to cover, and so I'm going to go right into it.

    Seth, I want to start with the global economy. As you look ahead to 2025, how do you see the global economy evolving in terms of growth, inflation and monetary policy?

    Seth Carpenter: I have to say – it's always difficult to do forecasts. But I think right now the uncertainty is even greater than usual. It's pretty tricky. I think if you do it at a global level, we're not actually looking for all that much of a change, you know, around 3-ish percent growth; but the composition is surely going to change some.

    So, let's hit the big economies around the world. For the US, we are looking for a bit of a slowdown. Now, some of that was unsustainable growth this year and last year. There's a bit of waning residual impetus from fiscal policy that's going to come off in growth rate terms. Monetary policy is still restrictive, and there's some lag effects there; so even though the Fed is cutting rates, there's still going to be a little bit of a slowdown coming next year from that.

    But I think the really big question, and you alluded to this in your question, is what about other policy changes here? For fiscal policy, we think that's really an issue for 2026. That's when the Tax Cut a…

41. The Beginning of an M&A Boom?

    15 november 2024 · 4 min

    Afspelen
    Our head of Corporate Credit Research Andrew Sheets explains why a stronger economy, moderate inflation and future rate cuts could prompt deal-making. Lees meer

    ----- Transcript -----

    Welcome to Thoughts on the Market. I'm Andrew Sheets, head of Corporate Credit Research at Morgan Stanley. Today I’ll discuss why we remain believers in a large, sustained uptick in corporate activity.

    It's Friday, November 15th at 2pm in London.

    We continue to think that 2024 will mark the start of a significant, multiyear uplift in global merger and acquisition activity – or M&A. In new work out this week, we are reiterating that view. While the 25 percent rise in volumes this year is actually somewhat short of our original expectations from March, the core drivers of a large and sustained increase in activity, in our view, remain intact.

    Those drivers remain multiple. Current levels of global M&A volumes are still unusually low relative to their own historical trend or the broader strength that we see in stock markets. The overall economy, which often matters for M&A activity, has been strong, especially in the US, while inflation continues to moderate and rate cuts have begun. We see motivations for sellers – from ageing private equity portfolios, maturing venture capital pipelines, and higher valuations for the median stock. And we see more factors driving buyers from $4 trillion of private market "dry powder," to around $7.5 trillion of cash that's sitting idly on non-financial balance sheets, to wide-open capital markets that provide the ability to finance deals.

    These high level drivers are also confirmed bottom up by boots on the ground. Our colleagues across Morgan Stanley Equity Research also see a stronger case for activity – and we polled over 60 global equity teams for their views. While the results vary by geography and sector, the Morgan Stanley Equity analysts who cover these sectors in the most depth also see a strong case for more activity.

    The policy backdrop also mat…

42. Decoding Signals Following the US Election

    14 november 2024 · 3 min

    Afspelen
    While the market waits for the incoming Trump administration to present its policy agenda, our Global Head of Fixed Income and Thematic Research Michael Zezas maps out some areas of early investor interest, including regulation and the US Treasury market. Lees meer

    ----- Transcript -----

    Welcome to Thoughts on the Market. I’m Michael Zezas, Morgan Stanley’s Global Head of Fixed Income and Thematic Research. Today on the podcast we’ll be talking about key themes coming out of the US election.

    It’s Thursday, Nov 14 at 10am in New York.

    The US election is over, and now the work begins for President Trump and Republican leaders in Congress. They’ll continue to focus in the coming weeks on staffing key roles in the government and fleshing out the policy agenda. When it comes to the economic and markets outlook for 2025, those details will matter a lot – particularly the sequencing and severity of changes to tariffs, immigration, and tax policy. That means for us the next few weeks will be key to learning what next year will look like. But there are still some areas where there’s already some signal for investors to lean on.

    One is in the financial sector and relates to regulation. A potentially delayed or diluted approach to bank regulation resulting from the policies of the new administration is one reason that our Banks Analyst Betsy Graseck is flagging a more bullish outcome and substantial outperformance potential for the sector. Similarly, our global head of credit research, Andrew Sheets, notes this election outcome should boost M&A activity, where an expected 50 percent pick-up in volumes next year could reach 75 percent or more.

    Another area is industrials, a sector where companies tend to spend a lot on capital. The Republican sweep substantially increases the chances that key tax benefits reducing the cost of capital expenditures are extended in a timely fashion.

    And in the U.S. treasury market, there’s signs that the most volatile part of the increase in yields …

43. US Elections: Lessons From the UK

    14 november 2024 · 4 min

    Afspelen
    As President-Elect Trump’s new administration takes shape, all eyes are on fiscal policy that may follow. Our Global Chief Economist Seth Carpenter uses the United Kingdom’s recent election as a guide for how markets could react to a policy shift in the US. Lees meer

    ----- Transcript -----

    Welcome to Thoughts on the Market. I'm Seth Carpenter, Morgan Stanley's Global Chief Economist, and today I'll be talking about the US election and fiscal policy and what lessons we might be able to draw from the fiscal experience in the UK.

    It's Wednesday, November 13th at 10am in New York.

    In a lot of our recent research, the US election has figured prominently, and we highlighted three key policy dimensions that the US administration is going to have to confront. Immigration, tariffs, and, of course, fiscal policy. We're going to keep elections as a theme, but it might be useful to draw some comparisons to the UK to see what lessons we might have for the US.

    We think the experience in the UK, which recently proposed a new fiscal budget months after an election, is relevant mostly because of the time between taking power and the budget being presented. While markets are in the business of anticipating changes, the process of actually creating policy is a lot more cumbersome and time consuming.

    In this week, where we've seen lots of expectations already being priced in, it's probably useful to try to think about that process of forming policy in the UK and see what lessons it implies for the US.

    Back in May, the UK elected a new government, changing party control after 14 years. A key moment for markets came just over a week ago, though, when the new government's presentation of their budget for the next fiscal year came up.

    Now, we should remember, the trust government had faced a market test when the announcement of their budget proposals led to a big sell off in interest rates. As a result, markets were keenly attuned this time to the new labor government's budget, particularly…

44. Will Tariffs Dampen Asia’s Economic Growth?

    12 november 2024 · 4 min

    Afspelen
    Our Chief Asia Economist Chetan Ahya discusses the potential impact of tariffs on China and other Asian countries following the US election. Lees meer

    ----- Transcript -----

    Welcome to Thoughts on the Market. I’m Chetan Ahya, Morgan Stanley’s Chief Asia Economist. Today on the podcast – with a Republican White House now in place, tariffs are the key issue that will matter to Asia.

    It’s Tuesday, November 12, at 2 PM in Hong Kong.

    With the US election results in, the question now is not if there will be tariff hikes, but when and how much. Will China alone see rising tariffs, or will there be universal tariff imposed on all imports to the US?

    The previous president Trump administration imposed several tariffs on Chinese imports beginning in 2018. And looking back, our learning is that weaker corporate confidence weighed more heavily on Asia’s growth outlook than the direct effect of tariffs on exports. Just to elaborate on the point on direct impact of tariffs: Despite the tariffs imposed on China during that period, what we observed is that China’s market share in global goods exports improved after the US started to impose tariffs on imports from China.

    Looking forward, let’s consider a scenario of 50 per cent tariffs on China alone. The hit to global and China corporate confidence may not be as large as it was in 2018 and 2019. This is in part because US-China trade tensions have persisted for several years now. Companies have invested in diversifying their supply chains since then, and the US share in China's exports has declined since 2017. Given all this, the drag on China’s exports may be less than the 1 percentage point that we saw last time.

    The rest of Asia would also experience a slowdown, but we think the overall drag on growth would be less significant this time. The effects on individual economies would differ based on their exposure to China. We think Australia and Indonesia will be more exposed. Korea, Taiwan, Malaysia, and Thailand would be moderately e…

45. Pricing In the Likely Republican Sweep

    11 november 2024 · 4 min

    Afspelen
    With the Republican party poised to clinch control of the White House and Congress, our CIO and Chief US Equity Strategist says markets are readying for a lighter regulatory environment, supportive tax policy and a possible rebound in investor enthusiasm. Lees meer

    ----- Transcript -----

    Welcome to Thoughts on the Market. I'm Mike Wilson, Morgan Stanley’s CIO and Chief US Equity Strategist. Today on the podcast I'll be talking about the results of last week’s election and its impact on equity markets.

    It's Monday, Nov 11th at 11:30am in New York.

    So let’s get after it.

    Our work leading up to the election showed that stocks likely to benefit from a Republican sweep did not actually see material outperformance up and through November 5th. In other words, this political outcome was not fully priced. As a result, this allowed for significant outperformance of Financials, Industrials, and other cyclicals last week. We see further follow through to the upside in quality cyclicals as prospects for a lighter regulatory environment, supportive tax policy and a potential rebound in animal spirits should rise following the election outcome. These developments came on the back of a macro backdrop that was already becoming more supportive of cyclical outperformance – and why we upgraded this cohort to overweight in early October. We continue to be sellers though of tariff-exposed consumer stocks and renewable energy stocks.

    Our upgrade to Financials in early October was rooted in our view that expectations were low going into earnings season while positioning remained light. Our work since then showed that the majority of the group's outperformance into the election could be explained by strong earnings revisions as opposed to rising odds of a Trump win in prediction markets. Now that we have the election results in hand, it appears that expectations for de-regulation are also driving performance upside in addition to improving fundamentals.

    While the 2016 playbook would suggest s…

46. Investor Expectations After the US Election

    8 november 2024 · 4 min

    Afspelen
    Our head of Corporate Credit Research Andrew Sheets provides an overview of uncertainty around policy following the election of a Republican administration. Lees meer

    ----- Transcript -----

    Welcome to Thoughts on the Market. I'm Andrew Sheets, head of Corporate Credit Research at Morgan Stanley. Today I’m going to talk about the US election - the implications in the past, present and future.

    It's Friday, November 8th at 2pm in London.

    The US Election is over, and the result was relatively clear. Republicans won control of the Presidency, the Senate, and on current projections, are likely to narrowly take the House of Representatives. The so-called ‘sweep’ will provide significant leeway to enact policy.

    There is going to be lots of time over future weeks and months, and even years, to discuss what all of this is going to mean. But for now, I want to offer a few thoughts on the impact across the past, the present and the future.

    Looking back, the US election has been a very well-known uncertainty that has hung over this market all year. The polling was close between two candidates with very different policy priorities. To the extent the simply not knowing was holding some investors back, or that investors were worried about a contested outcome, or even worse, political unrest – that issue has now passed. The relief from that passing may help explain some of the recent positive market reaction.

    For the present, we now sit in this curious middle-place where the uncertainty of the result is behind us, but any uncertainty from policy changes have not yet arrived. Coupled with still strong US economic data, another interest rate cut from the Federal Reserve yesterday, and the tendency of markets to perform well in November and December, and the path of least resistance in the near term may be for markets to continue to trade well.

    The future, however, may have just become less certain. Credit likes moderation and stability, and we think the current economic mix, with US GD…

47. Taking the Pulse of the US Consumer

    7 november 2024 · 9 min

    Afspelen
    Our panel of analysts discusses the health of the US consumer through the lens of spending, credit use and home ownership. Lees meer

    ----- Transcript -----

    James Egan: Welcome to Thoughts on the Market. I'm James Egan, Morgan Stanley's co-head of Securitized Product Strategy, and today we're going to take a look at the state of the US consumer from several different perspectives.

    Recent economic data suggests that the US economy is strong, and that inflation is on a downward trend. Yet, some of the underlying performance data is a little bit weaker. To understand what's happening, I'm joined by my colleagues Arunima Sinha and Heather Berger from the Global and US Economics teams.

    It's Thursday, November 7th, at 10am in New York.

    Now, the macro data on the consumer has looked pretty strong. Arunima, can you give a little bit more detail here? And specifically, how has consumer spending in the US been trending relative to where it was last year?

    Arunima Sinha: So, a good place to start, Jim, would be just to see where consumption spending was last year. And there it ended on a strong note. And in the first three-quarters of 2023, the average quarterly analyzed growth for consumption was just under 3 per cent. And that's where we are this year. We've seen solid growth rates in all three quarters this year, with the third quarter at 3.7 per cent. A particularly interesting aspect has been that the spending on goods has actually accelerated this year, with the third [quarter] number at a blistering 6.0 per cent on a quarterly basis.

    We have chalked this down to labor income growth remaining robust; and we did an analysis which showed that past growth in labor income boosts real consumption spending. Over this year, labor compensation has been growing strongly. So over 6 per cent in the first quarter and about 3.5 per cent in quarters two and three.

    And so, we continue to expect that that solid labor income growth is going to continue to boost real consumption spending.

    J…

48. After Trump Win, Where Do Markets Move from Here?

    6 november 2024 · 3 min

    Afspelen
    With a second Trump term at least partially reflected in the price of global markets, we focus on two key debates for the longer-term: Potential tariffs and fiscal policy. Lees meer

    ----- Transcript -----

    Welcome to Thoughts on the Market. I’m Michael Zezas, Morgan Stanley’s Global Head of Fixed Income and Thematic Research. Today on the podcast – some initial thoughts on the market implications of a second term for President Trump.

    It’s Wednesday, Nov 6, at 2pm in New York.

    As it became clearer on election night that Former President Trump was set to win a second term in the White House, markets began to price in the expected impacts of resulting public policy choices. The US dollar rallied, which makes sense when you consider that President Trump has argued for higher tariffs, something that could hurt rest of world growth more than the US.

    US Treasuries sold off and yield rose, something that makes sense given President Trump supports tax policy choices that could meaningfully expand deficits. And US equity markets rallied led by key sectors that could benefit fundamentally from extended tax breaks and deregulation, including industrials and energy.

    But with a second Trump term now at least partially reflected in the price of markets across assets, it gets harder from here to understand how markets move. There’s several key debates we’ll be tracking, here’s two that are top of mind.

    First, how will tariffs be implemented? Per the work of our economists, higher tariffs can raise inflation and crimp growth. They estimated that a blanket 10 per cent tariffs and 60 per cent tariffs on China imports would raise inflation by 1 per cent and dampen GDP growth by 1.4 per cent. Some pretty big numbers that would really challenge the soft-landing narrative and positive backdrop for equities and other riskier assets. Other approaches may carry the same risks, but to a lesser degree. Tariffs exercised via executive authority would, in our view, likely have to be targeted to cou…

49. Why Are Users and Investors Breaking Up with Online Dating?

    5 november 2024 · 4 min

    Afspelen
    Analyst Nathan Feather discusses why the online dating market is slowing down, and whether or not it can get back on track. Lees meer

    ----- Transcript -----

    Welcome to Thoughts on the Market. I’m Nathan Feather, Morgan Stanley’s Online Dating and US Small- and Mid-Cap eCommerce Analyst.

    Today, people across America are casting their votes. On this podcast, however, we're taking a break from our election coverage. And taking a leap into a different matter on many minds … and hearts. Online dating. Why it fell out of favor and how it might make a comeback.

    It’s November 5, at 10am in New York.

    Finding love is a tricky business. Dating has never been easy; but with an epidemic of loneliness and isolation, singles today are finding it harder than ever.

    For those looking for love, online dating seems to offer endless possibilities. Since its inception just three decades ago, the stigma around online dating has faded, leading more and more daters to put their faith – and money – into the algorithm. In the US, three out of four actively dating singles have used it at some point in their journey.

    But after years of consistent double-digit growth, the online dating market is now faltering, with US industry revenue growing just 1 per cent this year.

    Why? Well, we think the issue lies primarily in weakening user trends with the US user bases of major dating apps in decline. Since last spring, we have seen around a 15 per cent decrease in dating app use by singles actively looking for a relationship. To us this indicates that the product is not matching user expectations as some daters have grown tired of the persistent swiping and dead ends. Consequently, daters' intentions to use online dating in the future have consistently declined.

    Now, there are many theories about why this is happening. We think there may be residual impact from the pandemic when singles used online dating at record rates. People who found relationships during that time likely left the apps. And those wh…

50. US Elections: Weighing the Options

    5 november 2024 · 14 min

    Afspelen
    On the eve of a competitive US election, our CIO and Chief US Equity Strategist joins our head of Corporate Credit Research and Chief Fixed Income Strategist to asses how investors are preparing for each possible outcome of the race. Lees meer

    ----- Transcript -----

    Mike Wilson: Welcome to Thoughts on the Market. I'm Mike Wilson, Morgan Stanley’s CIO and Chief US Equity Strategist.

    Andrew Sheets: I'm Andrew Sheets, head of Corporate Credit Research at Morgan Stanley.

    Vishy Tirupattur: And I'm Vishy Tirupattur, Morgan Stanley's Chief Fixed Income Strategist.

    Mike Wilson: Today on the show, the day before the US election, we're going to do a conversation with my colleagues about what we're watching out for in the markets.

    It's Monday, November 4th, at 1130am in New York.

    So let's get after it.

    Andrew Sheets: Well, Mike, like you said, it's the day before the US election. The campaign is going down to the wire and the polling looks very close. Which means both it could be a while before we know the results and a lot of different potential outcomes are still in play. So it would be great to just start with a high-level overview of how you're thinking about the different outcomes.

    So, first Mike, to you, as you think across some of the broad different scenarios that we could see post election, what do you think are some of the most important takeaways for how markets might react?

    Mike Wilson: Yeah, thanks, Andrew. I mean, it's hard to, you know, consider oneself as an expert in these types of events, which are extremely hard to predict. And there's a lot of permutations, by the way. There's obviously the presidential election, but then of course there's congressional elections. And it's the combination of all those that then feed into policy, which could be immediate or longer lasting.

    So, the other thing to just keep in mind is that, you know, markets tend to pre-trade events like this. I mean, this is a known date, right? A known kind of event. It's not a surprise. A…