Morgan Stanley's Mike Wilson sees a choppy first half of 2025

Investing.com -- In an interview with Bloomberg Television, Morgan Stanley (NYSE:MS ) Chief US Equity Strategist Mike Wilson said he expects a choppy first half of 2025, with the outlook improving in the second part of the year.

Wilson told Bloomberg that the Wednesday decline in stocks and bonds could worsen as traders assess the impacts of higher inflation and interest rates. However, he believes the decline is unlikely to reach the extremes seen in 2022.

When asked about areas he is keeping a close eye on, Wilson highlighted trade and tariffs.

He believes tariffs will be the biggest focus for equity investors because of the potential effect on earnings and growth. He also pointed to taxes as another area to keep an eye on.

"Are they going to try to get more tax cuts through or are they just going to try to extend the existing tax cuts?" said Wilson. "That will affect rates."

Furthermore, while Wilson doesn't think we will know about taxes for quite a while, he adds that there will be "quite a bit" of information about tariffs in the next month or two.

"We think the first half is going to be choppy," Wilson told Bloomberg. Even so, he says that if various policies can be executed, the second half could be much better.

When it comes to areas Wilson is bullish on, he points to financials, energy, and commodities.

For financials, he notes that there seems to be a coalition around deregulation, while there is pent-up demand for M&A and other capital market activities.

Wilson continues to think there's value in financials, which he describes as a global call.

For energy, commodities, and materials, Wilson explains that they are all needed for aspects such as building data centers and adding infrastructure, and he sees them as sectors underappreciated by the market.

Source: Investing.com