Seth Carpenter, Morgan Stanley's Global Chief Economist, interviews Serena Tang, Morgan Stanley's Chief Global Cross-Asset Strategist, on their mid-year economic outlook. Tang recommends overweighting U.S. equities and core fixed income, favoring U.S. assets over global ones (except the U.S. dollar). They discuss the market's pricing of a slowing economy, with Tang highlighting the potential for significant returns in U.S. Treasuries due to anticipated Fed rate cuts. A key point of divergence from market consensus is their bullish outlook on U.S. dollar assets despite expectations of dollar weakening, attributing this to the lack of viable alternatives in the global market. The discussion also covers their short-term (3-6 months) and long-term (12 months) investment strategies and indicators they are monitoring to assess global growth fragility or resilience.
