Morgan Stanley's wealth management CIO sees data pointing to a strong cyclical recovery — and says investors should stop crowding into tech stocks
- Lisa Shalett told Bloomberg she sees consumer data that points to a strong recovery.
- The Morgan Stanley Wealth Management CIO said the buffer for the consumer will continue if Congress can reach a stimulus deal.
- She also said the market wants investors to crowd into "the same tech stocks that we've owned for the past 11 years."
- Read more on Business Insider.
Lisa Shalett, Morgan Stanley Wealth Management chief investment officer, told Bloomberg on Tuesday that she sees consumer data that points to a strong recovery, and also said that investors don't need to crowd into tech stocks.
Shalett said the personal savings rate was "very, very good," and pointed to the record level of government transfer payments in the second quarter. She said that while those transfer payments may have translated only slightly into retail sales and personal spending data, "it's nothing compared to the amount of money that's sitting on the sidelines."
In the second quarter, current-dollar personal income rose more than six-fold to $1.39 trillion, and disposable personal income surged 42.1% to $1.53 trillion. The personal savings rate, which measures personal saving as a percentage of disposable personal income, grew to 25.7% from 9.5% in the first quarter.
The investment chief added that if Congress can "get it done," referring to the next stimulus bill, the buffer for the consumer will continue. "If the consumer can stay okay against the backdrop where manufacturing and housing and early cycle sectors are really genuinely recovering and all of the data says it, we should be okay," she said.
Shalett said Morgan Stanley is facing a "conundrum" at the moment because the market does not want to embrace the story of a cyclical recovery, and instead wants to pile into technology. "The market wants to own the story that things continue to be horrible and we all have to crowd into the same tech stocks that we've owned for the past 11 years," she said.
Shalett said that she's facing a lot of cognitive dissonance as investors have seen "among the best periods for some of these tech stocks." Yesterday the Nasdaq hit an all-time high and had a record close. Making the case for a V-shaped recovery has not been easy, said Shalett, especially to clients who have been making money from tech and want to stay with what works.
What could change the CIO's contrarian viewpoint would be job losses in sectors like manufacturing, healthcare, and education-areas that she said she believes are recovering. "If we're not getting the validation of that part of our story, then we'd have to begin to pivot, certainly."