Despite the S&P 500 index rising by about 15% in the first half of the year, Lisa Shalett said that the index showed signs of "technical fragility," including deteriorating breadth and potential earnings difficulties for most constituent stocks.
China Securities News learned from the Futu Bull financial management company that Morgan Stanley Wealth Management has put forward some suggestions for investors to take defensive measures in the US stock market. The company's chief investment officer, Lisa Shalett, said in a report on Monday that investors in the second half of the year are facing a "complex choice" - whether to embrace market leadership in the face of declining growth momentum or to take certain defensive strategies in the face of monetary policy and global political uncertainty. Despite the S&P 500 index rising by about 15% in the first half of the year, Lisa Shalett said that the index showed signs of "technical fragility," including deteriorating breadth and potential earnings difficulties for most constituent stocks.
Lisa Shalett said that investors should focus on "stocks that are reasonably priced and include growth" such as medical care (XLV), industry (XLI), aviation/defense, some power grid infrastructure, finance (XLF), and real estate investment trusts for residential properties. She also recommended increasing holdings of Japanese stocks, gold, hedge funds, and investment-grade credit.
Lisa Shalett said, "At a time when the Federal Reserve is cutting interest rates, typical safe-haven assets such as U.S. bonds and the U.S. dollar may perform poorly over the next few months." "Meanwhile, traditional defensive stocks such as essential consumer goods may face other disadvantages, such as anti-inflation and reduced demand, and utilities and real estate investment trusts for residential properties are no longer passive holdings in a single industry."
Lisa Shalett pointed out that the profit forecasts for many defensive areas still rely on profit margin expansion, and major consumer goods companies are facing a "consumer backlash" after inflation spikes and structural demand declines caused by the adoption of GLP-1 weight loss drugs. She added that, at the same time, the passive, top-down approach of real estate investment trusts and utilities companies has missed key structural changes, including distinguishing between commercial and residential real estate or distinguishing between clean grid upgrades and regulated pricing schemes.
Lisa Shalett also said that there are risks to accepting market leadership due to valuations. In addition, she said that the reality is that the profit growth of the "Big Seven" companies in the U.S. stock market will slow significantly, narrowing the gap in profit growth that supports its outstanding performance.