Serena Tang, Morgan Stanley's Chief Cross Asset Strategist, and Vishy Tirupattur, Morgan Stanley's Chief Fixed Income Strategist, discuss the pushback they've received on Morgan Stanley Research's midyear outlook. The outlook recommends being overweight in U.S. equities and core fixed income, despite a prediction of slowing U.S. economic growth. They address the apparent dissonance between their economic and market narratives, explaining their constructive view on U.S. assets based on factors like expected policy easing exceeding market pricing, strong credit fundamentals, and the sheer size and liquidity of U.S. markets. They also discuss the anticipated dollar depreciation and the debate surrounding U.S. exceptionalism, emphasizing the importance of hedging currency risk for non-U.S. investors. Finally, they highlight the surprisingly positive outlook for corporate credit, considering it a potentially lucrative, albeit "boring," investment opportunity.
