00:00 Speaker A
Let’s turn now back to the equities market here. Morgan Stanley strategist Mike Wilson says the tides may be turning for US stocks. Citing a weaker dollar, the strategist says the earnings outlook for equities will improve and that the massive rotation out of stocks this year could turn around. There you’re taking a look at a partial quote on the screen, relative performance versus international developed equities can swing back in favor of the US in Mike Wilson’s view.
00:26 Speaker B
Yeah, it’s interesting. This is really all based off of a call for a weaker dollar which we may or may not be getting. It does seem like the Trump administration is in favor of that move thus far. Uh having said that, Mike Wilson again saying that a weaker dollar would offer a tailwind specifically for US earnings and US earnings revisions moving forward. It would be a again, a tailwind for driving more money back to the US. We’ve seen this kind of divulging of the US exceptionalism narrative and if Wilson’s call holds true, this idea that a lower dollar will lead to a return to US equities and a flight back to those large cap stocks in particular, off the back of what we have seen is a little bit more euphoria around international equities thus far this year.
01:23 Speaker A
Yeah, and just to give people a barometer out there for Q1, and this is according to some fact set data, for Q1 2025, the estimated year-over-year earnings growth rate for the S&P 500 is 7.1%. If that is the actual growth rate for the quarter, it’s going to mark the seventh straight quarter of year-over-year earnings growth reported by the index. So that just kind of a measuring post to keep in mind as we go into this next earnings season.
02:05 Speaker B
Absolutely. Such a great point, Brad. And I do think, to me, what also really stands out is that he’s talking about the MAG 7 tech stocks potentially already bottoming and this is not the first call that we’ve seen like this over the course of the weekend. Keith Lerner over at Truist, friend of the show, also talking about the same thing that he does see this return to US exceptionalism. It’s fascinating to me that we had 16 years of US stocks on top and what do we have? Eight weeks maybe max of a question mark to that narrative. And now we’ve already got analysts running back to say, “Hey, go back to the US where you belong.”
