No time to turn defensive on Wall Street; Morgan Stanley says there’s more steam in cyclical trades – News 24-7 Live News 24-7 Live
No time to turn defensive on Wall Street; Morgan Stanley says there’s more steam in cyclical trades

No time to turn defensive on Wall Street; Morgan Stanley says there’s more steam in cyclical trades

Some Wall Street investors have switched back to defensive trades after a strong rally in equity indices saw them surge to record highs. Investors moved their focus towards defensive, choosing large-caps over mid-cap and small-caps, and went for growth stocks instead of value. However, this move towards defensives might be pre-mature, according to Lisa Shalett, Chief Investment Officer, Morgan Stanley Wealth Management. “We disagree and believe that a defensive shift for investment portfolios is premature. In our view, recent events represent a pause — not a reversal — in the reflation trade,” she added.

The shift towards defensive sectors signals that earning expectations already price in most of the post-pandemic good news, ranging from the economic rebound to re-opening. Economic growth ahead, however, could be much broader and stronger than any of the cycles seen earlier. “Fiscal spending, with its emphasis on infrastructure, would be inherently linked to greater “capital deepening,” in which capital per worker is increasing in the economy,” Lisa Shalett wrote in a blog.

news Source: financialexpress

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