Latest news with #LisaShalett
Yahoo
6 days ago
- Business
- 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
AU Financial Review
14-07-2025
- Business
- AU Financial Review
ASX to rise, Wall St edges up on US-EU trade talk hopes
Australian shares are set to rally after President Donald Trump signalled he's willing to negotiate on tariffs with the European Union, easing some of the concerns stoked by the issuing of tariff letters over the last week. All three US benchmarks reversed early losses to trade modestly higher in afternoon trade. While some strategists have increased their year-end targets for the S&P 500, Morgan Stanley's wealth management investment committee, led by Lisa Shalett, is wary. 'Investors have added a new level of bravado, viewing tariffs as a nonissue.' 'With stock indexes again near all-time highs, investors appear to be stretching to embrace a Goldilocks thesis. The narrative seems to be premised on the new tax bill's support of a capex boom, with limited tariff-related growth and inflation risk. We see S&P 500 gains beyond the 6500 6600 range as difficult to achieve, however, given ongoing puts and takes.' Market highlights ASX futures are pointing up 58 points or 0.7 per cent to 8606. All US prices near 2.30pm New York time. Today's agenda The key focus will be on the prime minister and his visit to China this week. On Tuesday, there's one data print of note: the June Westpac-Melbourne Institute Consumer Sentiment measure. eToro's Josh Gilbert: The WMI 'measure is a fairly reliable watermark for consumer attitudes in the country. Sentiment has been improving month-over-month following a big dip in April. Last week, ANZ-Roy Morgan Consumer Confidence index climbed for a third straight week, up by 1.4pts to 88.6, and Westpac's June figures will probably indicate similar upward momentum'. Overseas, China is set to report second-quarter GDP and June trade, retail sales and industrial production. The US is scheduled to release June CPI at 10.30pm. Morgan Stanley: 'We see core CPI prices at 0.28 per cent in June (2.96 per cent year-over-year). We think June will show more evidence of tariff pass-through, but the overall push remains mild with some heavily tariffed goods still showing weakness. We forecast a more meaningful acceleration in July and August. Top stories Chanticleer: Plenty won't like Matt Comyn's big fix for Australia. That's OK | The CBA chief executive may cop flak for putting some of the more controversial ideas on the table to solve the productivity crisis. But it's worth the risk. | Defeated Liberal candidate Gisele Kapterian has petitioned the High Court to re-examine 'a small number' of disputed ballot papers. | Shared optimism about the technology and a promised increase in jobs and prosperity are a useful counter to rising concerns about Australia's growth prospects, writes Jennifer Hewett.
CNBC
10-07-2025
- Business
- CNBC
The new bull case for the stock market is looking past short-term risks
One way for investors to justify buying stocks now, despite all of the uncertainty in the macroeconomy, is to operate as if today's news likely won't matter much to the market in a year. Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management, said in a note to clients that there is a new "bull case" for the market emerging that considers tariffs to be a "non-event," at least partly because lower oil prices will help to offset inflation concerns. The outlook for corporate profits also gives investors a reason to wave off any negative trends in the upcoming, second-quarter earnings season. "2026 S & P 500 earnings are expected to show accelerating growth from 2025's 7-8% to 13-14% — gains come from margin expansion, tax benefits," Shalett said. Another factor Shalett mentioned is a "bad news is good news" situation with the Federal Reserve, which could deliver rate cuts if the economy starts to weaken. Shalett's theory helps explain why markets have been so calm recently despite the fact that tariff threats from the White House are ramping back up again. President Donald Trump's imposition of 50% tariffs on Brazil this week was even above the level the country faced on April 2, before the market swooned and many global tariffs were delayed. Kristy Akullian, head of iShares investment strategy for the Americas, pointed out in a commentary that July has so far been marked by low trading volumes and low volatility. "Markets have boosted their immunity to uncertainty: neither last week's passage of the [One Big Beautiful Bill Act] nor this week's tariff announcements caused the S & P 500 to budge by more than 1%. In April, policy announcements were met with 11 such days of > 1% swings. Similarly, the VIX now sits below 17; in April it spiked above 60 and averaged 32 over the month. In fact, since the local lows of April 8th, the index has rallied more than 25%, despite the overhang of unresolved trade deals," Akullian said. The VIX refers to the Cboe Volatility Index , which measures the expected moves in the S & P 500 over the next month based on options pricing. .VIX 6M mountain The Cboe Volatility Index is trading well below its highs from earlier this year. Of course, the line between confidence and complacency can be a thin one for investors. Charles Schwab chief investment officer Liz Ann Sonders told CNBC that she sees more downside risk than upside for equities and highlighted a curious divergence in different markets at the moment. "Generally, you've been in this kind of lower yield backdrop since the latter part of May, suggesting that the bond market is pricing in less economic growth. Yet the cyclicals within the equity market are pricing in more economic growth. I think that there's just mixed messages coming from various markets," Sonders said. – CNBC's Michael Bloom contributed reporting.
Yahoo
02-07-2025
- Business
- Yahoo
Stock market closes out chaotic quarter on a high note as S&P 500 notches another new record
The S&P 500 and hit new highs Monday, ending a turbulent quarter that saw a near-bear market two months ago. Monday's U.S. stock market close marked fresh highs for multiple indices, a sharp departure from previous months as one of the most chaotic quarters for equities in recent memory came to an end. The second quarter began on an historically tumultuous note, with President Donald Trump's April 2 announcement of sweeping tariffs sending stocks into free fall and the bond market into turmoil, and putting the U.S.'s global economic dominance at risk. Since then, though, the market has steadily climbed and climbed, as investors shake off concerns about the policies and focus on the news they want to see, like potential tax cuts. In fact, the S&P 500 and Nasdaq both hit all-time highs Friday after Trump said that the U.S. signed a trade deal with China. The momentum continued Monday, with the S&P 500 and Nasdaq notching new all-time highs and increasing 0.52% and 0.47%, respectively, from Friday's session. The Dow Jones Industrial Average ended the day up 0.63% (though not in record territory). 'As markets reach new all-time highs—even with economic surprises at an 11-month low and geopolitical and tariff-related uncertainties lingering—equity investors appear to have entered another 'bad news is good news' phase, with the focus shifting to potential rate cuts, tax incentives, and deregulation,' says Lisa Shalett, chief investment officer of Morgan Stanley Wealth Management. The upward swing comes as inflation stabilizes and earnings trend higher. That said, some analysts and economists point to other potential cracks. 'Arguably, the S&P 500 just returning to its previous record is not enough,' writes Hubert de Barochez, senior markets economist at Capital Economics. He notes that while larger company stocks look good, the Russell 2000, an index of U.S. small caps, is still below its record high, and the index of so-called Magnificent Seven tech stocks, including stalwarts like Amazon, Apple, and Tesla, has also not surpassed its previous high. That said, shares of Meta—one of the Mag Seven stocks—hit a record high late Monday, after CEO Mark Zuckerberg announced a restructuring of the company's artificial intelligence group. More volatility is possible. Next week, the president's 90-day tariff pause is set to expire, and deals with many countries have yet to be made. There is also uncertainty surrounding the Republican tax bill that would add nearly $3.3 trillion to deficits over a decade and whether it can make it through both chambers of Congress this week. And analysts say inflation related to tariff policies has yet to be seen in the official data. 'We think that the high level of uncertainty, which notably stems from Trump's chaotic policymaking, will prevent the S&P 500 from rising as quickly as it has recently,' writes de Barochez. 'The impending expiration of tariff 'pauses' may spark another boot of volatility in the markets.' This story was originally featured on Sign in to access your portfolio
Yahoo
29-06-2025
- Business
- Yahoo
This Top Warren Buffett Holding Could Outperform the S&P 500 in the Second Half of 2025, According to Certain Wall Street Analysts
Warren Buffett has consistently sold more stocks than he bought over the last 30 months. The biggest challenge is that many of the biggest companies in the market have high valuations and low expected returns. This investment is low-risk and offers good value right now. 10 stocks we like better than S&P 500 Index › Warren Buffett is widely regarded as one of the greatest investors of all time. He has a public track record of over 70 years to back that up, generating massive market-trouncing returns over that time. His company, Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) has continued to outperform the S&P 500 (SNPINDEX: ^GSPC) in 2025. That's despite the fact that Buffett's retirement announcement in May has somewhat deflated the premium investors are willing to pay for shares. That speaks to the strength of Buffett's portfolio of investments, including owned and operated businesses, marketable equities, private issues, and bonds. While Buffett expects everything his company buys to outperform over the long run (why else would he buy it?), one of Berkshire's biggest holdings looks particularly well-positioned to do so in the near term. That's backed up by analysis from Morgan Stanley's team of market analysts led by Lisa Shalett. Here's the Buffett investment that could outperform over the rest of the year. It's worth pointing out that Buffett has had a hard time identifying great opportunities in the stock market recently. Not only that, but he's consistently sold many of Berkshire's biggest marketable equity holdings, including Apple (NASDAQ: AAPL), Bank of America (NYSE: BAC), and Citigroup (NYSE: C). That said, Buffett hasn't said that he sees significant challenges developing at any of those companies. Apple notably remains Berkshire's largest marketable equity holding, accounting for about 21% of the portfolio. Bank of America remains third in line with more than 10% of the $283 billion portfolio invested in the bank stock. Buffett did cut Citi entirely, though. The challenge for Buffett in holding those stocks appears to be a matter of valuation. Apple's price-to-earnings ratio when Buffett made Berkshire's initial investment in the stock was between 10 and 11.3. Today, it trades for 31 times trailing earnings, and it consistently traded higher throughout the second half of last year. When it comes to bank stocks, Buffett has mentioned that the new accounting rules requiring banks to mark assets to market make it difficult to assess the financial reality of their balance sheets. As a result, he's less comfortable holding companies like Citi, and he's slowly selling off harder-to-value financial stocks. It's not just those three that Buffett's been selling. In fact, Berkshire's been a net seller of stocks for 10 straight quarters. Total sales during that period add up to more than $174 billion in excess of Berkshire's stock purchases. While some of that cash went toward paying a record corporate tax bill last year, the vast majority has gone into a single investment vehicle: short-term U.S. Treasury bills. Berkshire Hathaway held over $314 billion of U.S. Treasury bills as of the end of the first quarter. Morgan Stanley analysts think that's a smart place to stash cash in the current financial market environment. In fact, they think there's a good chance T-bills outperform the S&P 500 through the end of the year. One of the biggest reasons analysts think government bonds offer a better investment than the S&P 500 right now is that the premium investors get for taking on the risk of equities is extremely low. Shalett and her team say the equity-risk premium sits near a 20-year low. With the earnings yield (the inverse of the price-to-earnings ratio) on the S&P 500 sitting around 4.7%, that's not a lot higher than the 4.3% investors can receive on 10-year Treasuries. One-month to six-month yields also range between 4.1% and 4.3% as of June 25. Meanwhile, there seems to be a lot of risk involved with buying equities right now, considering the ongoing conflicts in the Middle East and unpredictable U.S. trade policies. Further supporting the short-term value of Treasury bills are proposed regulatory changes, says Shalett. The Federal Reserve proposed adjusting the supplementary leverage ratio for banks. If banks can take on more Treasury bills on their balance sheets, it should support a higher debt ceiling without a rise in interest rates (thus supporting the value of current bond issues). Additionally, the Genius Act supports the creation and issuance of stablecoins, which are typically backed by U.S. Treasuries, adding more bidders to the auction. But it's important for investors to keep in mind that these are short-term factors. The equity risk premium is unlikely to stay this low for very long, especially if the above factors and the Fed's plans to eventually lower the Fed Funds Rate push yields lower over time. Despite the fact that Buffett has more money in Treasuries than marketable equities right now, he'd still prefer Berkshire's money to go into stocks. "Berkshire shareholders can rest assured that we will forever deploy a substantial majority of their money in equities," Buffett wrote in his 2024 letter to shareholders. The challenge for investors is finding good value in the current market. That's an even bigger challenge for Buffett, who's not very interested in opportunities where he can only invest a few billion dollars. The good news for smaller investors is that small- and mid-cap stocks trade at much more attractive valuations than large-cap stocks. So, while the large-cap S&P 500 index doesn't look that attractive right now, there are plenty of opportunities among smaller companies. Before you buy stock in S&P 500 Index, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and S&P 500 Index wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $713,547!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $966,931!* Now, it's worth noting Stock Advisor's total average return is 1,062% — a market-crushing outperformance compared to 177% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 23, 2025 Bank of America is an advertising partner of Motley Fool Money. Citigroup is an advertising partner of Motley Fool Money. Adam Levy has positions in Apple. The Motley Fool has positions in and recommends Apple, Bank of America, and Berkshire Hathaway. The Motley Fool has a disclosure policy. This Top Warren Buffett Holding Could Outperform the S&P 500 in the Second Half of 2025, According to Certain Wall Street Analysts was originally published by The Motley Fool Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
