According to ChainCatcher news, Morgan Stanley's chief investment officer and chief US equity strategist Mike Wilson has expressed his latest views. He pointed out that the breadth of the US stock market in December hit a historical low, which coincides with the 10-year Treasury yield breaking the 4.5% threshold, indicating that the Federal Reserve may not be able to provide the easing policies the market expects.
Wilson analyzed that the current disconnection between market breadth and prices is similar to that of 1999, primarily due to abundant liquidity. As the scale of reverse repurchase agreements (RRP) shrinks from its peak of $2.5 trillion, and the Federal Reserve may slightly lower interest rates, liquidity tightening may be faced in early 2024. He advises investors to continue focusing on high-quality stocks, as non-profitable growth stocks and low-quality cyclical stocks may face significant impacts.
Wilson stated that due to the lack of mean reversion in recent years, investors are more inclined to track price trends, leading to extreme concentration in the market. The 'quality' factor has become a widely used stock selection criterion.
