In an outlook for 2021, a team including Andrew Sheets recommended
investors overweight equities and corporate bonds against cash and government
debt, and sell the US dollar.
Morgan Stanley
strategists said an expected “V-shaped” economic recovery, greater clarity on
Covid-19 vaccines and continued policy support offer a favorable environment
for stocks and credit next year.
In an outlook for
2021, a team including Andrew Sheets recommended investors overweight equities
and corporate bonds against cash and government debt, and sell the US
dollar. Volatility is set to decline, and investors should be “patient” in
commodity markets, the strategists said.
“This global
recovery is sustainable, synchronous and supported by policy, following much of
the ‘normal’ post-recession playbook,” they wrote. “Keep the faith, trust the
recovery.”
A gauge of global
stocks headed toward a record Monday amid optimism that the expected roll-out
of vaccines and additional US fiscal stimulus will bolster the world economy.
Still, skeptics argue the short-term outlook is challenging as nations resort
to lockdowns to fight a resurgence in virus cases and lawmakers bicker over the
size of US relief spending.
Morgan
Stanley joins JPMorgan Chase & Co and Goldman Sachs Group in painting a
positive outlook for equities. JPMorgan strategist Marko Kolanovic said US
election results create a bull case for markets, while David Kostin at Goldman
Sachs expects society to normalise gradually next year.
The Morgan Stanley
team doesn’t expect a smooth path upwards and noted that significant challenges
remain. Risks include a worse-than-expected Covid-19 winter wave, and a return
to austerity in the longer term, according to the note.
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