Morgan Stanley Chief Executive Ted Peake expressed optimism about the stock market on Thursday and said the U.S. economy will continue to outperform in 2025.
“The world is still dominated by the American consumer,” Peake told CNBC.Squawk Box Asia” from the Morgan Stanley Summit in Singapore. “U.S. corporate balance sheets are generally very good. The new administration is talking about growth.
He did acknowledge that there will be some caution due to factors such as policy uncertainty, but “overall, it’s understandable that people continue to be constructive.”
Peake said Morgan Stanley expects the broad-based S&P 500 to rise, noting that sectors such as financials and industrials are likely to do well as the economy continues to grow and some deregulation occurs.
this S&P 500 Index Year-to-date gains are just over 24%, while Dow Jones Industrial Average increased by 15.13%.
Although he also said that the market may fall at times, the overall momentum seems to be pointing to a better 2025.
Regarding the Fed, Peake said the central bank is doing a “very good job.”
He said the Fed’s cautious approach was “the right thing to do,” adding that the Fed did not want to change its direction of cutting interest rates.
Trade war worries
Asked if he was worried about a new trade war in light of the incoming Trump administration, Peake simply replied: “The biggest risk is some combination of geopolitics and policy mistakes.”
His point is that the U.S. economy is growing. However, the question is whether inflation will overheat and dampen growth due to underlying inflationary factors such as deglobalization and the possibility of tariffs, Peake added.
US President-elect Trump has threatened to impose a 60% tariff on Chinese goods exported to the United States and a 10%-20% tariff on global imported goods.
Chief Economist, Morgan Stanley Seth Carpenter told CNBC On Wednesday, Trump proposed tariffs that would weaken U.S. economic growth heading into 2026.
China, on the other hand, is battling deflation and a lack of consumer confidence, Peake said, noting that the country has taken measures such as lowering mortgage rates and interest rates to stimulate the economy.
Therefore, he added, both sides have a “common motivation” to find solutions that will benefit the “growth” of both countries’ economies.
