Morgan Stanley analyst Mike Wilson pointed out that the US stock market has not fully reflected the expectations of Trump's victory, although there are signs that participants are beginning to price it in. Financial stocks have performed well, benefiting from a strong earnings season, but the overall gains are not significant. Wilson is skeptical about the rebound of other sectors after Trump's victory, believing that fundamental factors have a greater impact on financial stocks and will continue to dominate the industry's performance in the future
Morgan Stanley strategist stated that the US stock market has not fully priced in a Trump victory.
On October 28th, Mike Wilson, Chief US Equity Strategist at Morgan Stanley, stated that although there are indeed some signs indicating that market participants are starting to price in a Trump victory, such as the surge in Bitcoin prices, the sharp drop in the Mexican peso, the rise in US bond yields, and the strong performance of financial and industrial stocks... the gains are not significant in most areas, except for financial stocks.
Among major industries, financial stocks exceeded earnings expectations by the largest margin, ranking second in exceeding revenue expectations. Wilson believes that in addition to the impact of expectations for a Trump victory, financial stocks have also benefited from a strong earnings season.
"In other words, we believe that fundamental drivers have a greater impact on financial stocks, and in the future, the impact on this industry will continue to outweigh the impact of election results."
So, in the case where a Trump victory has not been fully priced in, if he wins, will tariff-sensitive consumer stocks, renewable energy stocks, etc., rebound? Wilson is skeptical about this.
In 2016, commodities, manufacturing, and industrial sectors in the US experienced deep contractions, and the market welcomed reflationary strategies; however, now, the economic cycle has become more mature, and the shadow of inflation remains significant. Wilson stated:
"In 2016, the impact of inflation on consumers was different from now, and the risks of rising bond yields due to deficit expansion were not as significant as they are now."