Investing.com – In an interview with Bloomberg TV, Morgan Stanley (NYSE:) Mike Wilson, chief US equity strategist, said he expects a volatile first half of 2025, with the outlook improving in the second part of the year.
Wilson told Bloomberg that Wednesday’s decline in stocks and bonds could worsen as traders assess the effects of higher inflation and interest rates. However, he believes the decline is unlikely to reach the extremes seen in 2022.
When asked what areas he is monitoring closely, Wilson highlighted trade and tariffs.
He believes the tariffs will be the biggest focus for equity investors because of their potential impact on earnings and growth. He also pointed to taxes as another area to watch.
“Are they going to try to get more tax cuts or are they just going to try to extend the current tax cuts?” Wilson said. “That will impact rates.”
Furthermore, while Wilson doesn’t think we’ll know more about taxes for a long time, he adds that there will be a “fair amount” of information about tariffs in the next month or two.
“We think the first half will be choppy,” Wilson told Bloomberg. However, he says that if different policies can be implemented, the second half could be much better.
When it comes to areas where Wilson is bullish, he points to financials, energy and commodities.
Regarding the financial sector, he points out that there appears to be a coalition around deregulation, while there is pent-up demand for mergers and acquisitions and other capital market activities.
Wilson continues to believe that there is value in financial statements, which he describes as a universal calling.
As for energy, commodities and materials, Wilson explains that they are all needed for aspects such as building data centers and adding infrastructure, and he sees them as sectors that are underappreciated by the market.
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