Morgan Stanley Chief Investment Officer: The collapse of market breadth indicates a liquidity inflection point, and it is recommended to adhere to high-quality strategies
Mars Finance News, according to Jinshi, Morgan Stanley Chief Investment Officer and Chief U.S. Equity Strategist Mike Wilson expressed his latest views. He pointed out that the breadth of the U.S. stock market hit a record low in December, which coincided with the 10-year U.S. Treasury yield breaking the 4.5% threshold, indicating that the Federal Reserve may not be able to provide the easing policy expected by the market. Wilson analyzed that the current market breadth and price disconnection phenomenon is similar to that in 1999, mainly due to ample liquidity. With the scale of reverse repurchase (RRP) shrinking from the peak of US$2.5 trillion and the Federal Reserve's possible small interest rate cuts, liquidity may be tightened in early 2024. He suggested that investors continue to focus on high-quality stocks, as unprofitable growth stocks and low-quality cyclical stocks may be hit hard. Wilson said that due to the lack of mean reversion in the past few years, investors are more inclined to track price trends, resulting in extreme concentration in the market, and the "quality" factor has become a widely used stock selection criterion.
