Morgan Stanley
  • Wealth Management
  • Jul 7, 2020

Shalett: A Hampered U.S. Reopening Could Support Non-U.S. Stocks

Rising coronavirus cases could hamper the U.S. recovery, potentially making non-U.S. equities more attractive, Lisa Shalett, Wealth Management Chief Investment Officer, told Bloomberg on July 7.

Wealth Management Chief Investment Officer Lisa Shalett tells Bloomberg The Open:

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“Over the last 11 years, the U.S. economy and the USD (U.S. dollar) have outperformed. Relative growth rates have been better and relative yields have been better. But if we get into a period over the next 6 to 12 months where U.S. growth is meaningfully hampered in terms of recovery because the coronavirus is not under control and reopening cannot proceed smoothly, as it appears to be proceeding in most other geographies, then we can find ourselves in a position where not only does the U.S. equity market underperform on a relative basis but the dollar starts to materially weaken.

“In January, the U.S. economy was already slowing. Scenarios where the rest of the world outperforms in 2021, 2022, are viable, especially if the U.S. gets into a situation where headwinds from the coronavirus are sustained and we have disputes about policy stimulus.

“As a result, we continue to emphasize that we’re less interested in owning the S&P 500 as an index. It’s extraordinarily expensive and concentrated in a handful of names. We do think there are stocks to selectively buy in the U.S., but we’re moving away from owning the index and prefer to supplement U.S. stock picking with owning international equities.” 

Shalett: A Case for Non-U.S. Stocks