Morgan Stanley’s Shalett Sees ‘Massive Disconnects’ in Stocks
- Sees rally in cyclicals at odds with economic, profit outlook
- Warns market stability in danger as gambling spirits creep up
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Stocks have rallied in the face of worsening earnings and economic expectations, producing “massive disconnects” that threaten market stability, warned Lisa Shalett at Morgan Stanley Wealth Management.
The chief investment officer flagged a surge in economic-sensitive shares relative to defensive stocks as a sign of the market’s confidence in future growth. Yet indicators of retail sales, manufacturing and business leaders’ confidence have been weakening along with corporate earnings.