In this episode of "Thoughts on the Market," Serena Tang and Seth Carpenter discuss Morgan Stanley's midyear outlook for the global economy and markets. Carpenter outlines a "Skewed to the Downside" outlook, anticipating a slowdown in the U.S. and global economies due to trade and immigration policies. He forecasts higher inflation and lower growth for the U.S., with potential bright spots in India and Japan. Tariffs are expected to drive up inflation in the U.S. but create disinflationary pressure elsewhere, influencing central bank policies. Trade policy uncertainty is seen as negatively impacting business investment, and emerging markets face constraints in easing monetary policy due to potential currency instability. Carpenter emphasizes the importance of scenario planning amid exceptional volatility, advising investors to remain focused on the macro economy while acknowledging the difficulty in predicting its direction.
