Morgan Stanley's Sherry Paul: Next leg of bull market will come from broadening out beyond AI story
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Yahoo
39 minutes ago
- Yahoo
Trump's tariffs and the tax bill are splitting the stock market. Here's the playbook for investors, according to Morgan Stanley.
Trump's policies are splitting the stock market, Morgan Stanley says. The bank said it believes Trump's tariffs and tax bill are splitting parts of the market in half. It says there are a handful of things for investors to look for when deciding where to put their money. President Donald Trump's policies are splitting the market into distinct camps, Morgan Stanley says. Lisa Shalett, the chief investment officer of the bank's wealth management arm, pointed to the effects of Trump's tax bill and his sweeping tariffs in a recent podcast. "Now, as the impacts of the tax reform bill and global tariff implementation begin to roll through the economy, we sense that yet another series of great divides are opening up," Shalett said. Here are the splits that are emerging: 1. Consumer-facing businesses vs. B2B businesses Businesses that sell directly to consumers are more impacted by any potential weakening fo household balance sheets, a risk that business-to-business firms are less worried about. Market pros believe that tariffs could weaken consumers' spending power, as companie can pass along the cost of import duties by raising prices. Shalett added that those pressures are coming at an already critical time for consumers, pointing out that more Americans are falling behind on credit card and auto loan payments. The job market is also flashing signs of weakness, with payrolls in May and June seeing a large downward revision, while job growth for the month of July was below expectations. A weaker labor market often leads to a pullback in consumer spending. 2. Multinational exporters vs. importers Multinational exporters outside of the consumer space are facing "fewer external barriers" to sending products abroad, Shalett said, suggesting they were more shielded from the trade war. Those firms are also benefitting from a weaker US dollar, which is making their products more attractive to foreign customers, Shalett added. Multinational firms are also typically more capital- and research & development-intensive, she said. That also positions them to benefit more from the tax benefits outlined in the "One Big Beautiful Bill," which creates favorable tax treatment for domestic R&D costs. "So, with this new structural division emerging, global stock selection is more important now than ever," Shalett said. Here are some characteristics of the companies investors should be leaning toward, in Shalett's view: Multinational non-consumer exporters. Tailwinds for these companies should continue, Shalett said. Select tech, financials, industrials, energy, and healthcare stocks. Stocks in these areas could benefit from some of the policies included in Trump's tax bill, which could lead to upside surprises in earnings and cash flow. Stocks that aren't "overhyped." International stocks, commodities, and energy infrastructure. Companies in these areas could help an investor diversify their portfolio, she added. Sentiment has shifted slightly more bearish in the last week, with Trump doubling down on tariff threats and markets digesting weaker-than-expected economic data. Goldman Sachs, Evercore ISI, Stifel, Pimco, and HSBC are among the firms that have recently flagged the risk of a stock correction or advised investors to rethink their portfolio allocations. Read the original article on Business Insider Sign in to access your portfolio
CNBC
41 minutes ago
- CNBC
DraftKings CEO says gambling tax provision in Trump's megabill 'doesn't make sense'
In a Wednesday interview with CNBC's Jim Cramer, DraftKings CEO Jason Robins questioned a new tax provision related to gambling in President Donald Trump's megabill, calling it a "very strange change." "I do think it's something that doesn't makes sense," he said. "If you can't deduct all your losses, you know, how does that make sense that you pay income tax on something that's not actually income." Preciously, gamblers could deduct all their losses from their winnings so that they are only paying taxes on net winnings. But the new rule makes it so that gamblers can only deduct 90% of their losses from their winnings. For example, if someone wins $1,000 but also loses $1,000, they would only be able to deduct $900 and would have to pay taxes on $100 of winnings. Robins said he believes the change was made as part of a "technicality" to follow the Byrd rule, which bans "extraneous" matters — usually anything unrelated to federal revenue or spending — in the budget reconciliation process. He said there has been some "appetite" to change the new provision, adding that DraftKings is working with members of Congress to do so. DraftKings posted a strong quarter Wednesday after close, and shares jumped more than 3% in extended trading. The sports betting company said this quarter set revenue, net income and EBITDA records, with management attributing the success to "continued healthy customer engagement, efficient acquisition of new customers, higher structural Sportsbook hold percentage, and sportsbook-friendly outcomes." Robins offered a sanguine outlook on widespread legalization of sports betting, saying he thinks progress has been made across the board. He suggested the practice will eventually be allowed in most states, including large markets like California and Texas. Online sports betting is currently legal in 34 states, according to the latest information on the American Gaming Association website. "I can't imagine a world where you can, you know, bet in 30, 40 plus states, and California is not one of them, and Texas is not one of them," Robins said. Click here to download Jim Cramer's Guide to Investing at no cost to help you build long-term wealth and invest
Bloomberg
2 hours ago
- Bloomberg
S&P, Nasdaq Climb as Apple Plans Provide Boost
Bloomberg Television brings you the latest news and analysis leading up to the final minutes and seconds before and after the closing bell on Wall Street. Today's guests are Nuveen's Tony Rodriguez, Cleo Capital's Sarah Kunst, Seaport Research Partners' David Joyce, AlixPartners' Jeff Goldstein, Manulife John Hancock Investments' Emily Roland, D.A. Davidson's Tom White, Remitly's Matt Oppenheimer, Informatica's Amit Walia, Intelligent Alpha's Doug Clinton. (Source: Bloomberg)
