Morgan Stanley CEO Ted Pick on Thursday expressed optimism about the stock market, saying that the U.S. economy will continue to outperform in 2025.
“The world is still led by the U.S. consumer,” Pick told CNBC’s “Squawk Box Asia” from the Morgan Stanley summit in Singapore. “Corporate balance sheets in the U.S. are on aggregate, terrific. And [the] new administration is talking about growth.”
He does acknowledge there will be some caution, due to factors including policy uncertainty, but “on the whole, people are are understandably continuing to be constructive.”
Pick said Morgan Stanley predicts that the broad-based S&P 500 will increase, pointing out that sectors like financials and industrials could perform with continued economic growth and some deregulation.
The S&P 500 has gained just over 24% year to date, while the Dow Jones Industrial Average has seen a 15.13% climb.
While he also said that the market may fall sometimes, the overall momentum seems to point to a better 2025.
On the U.S. Federal Reserve, Pick said that the central bank has done a “good job.”
It moved cautiously, which was the “right thing to do,” he said, adding the Fed would not want to reverse course on a rate cut.
Trade war worries
Asked if Pick is worried about a new trade war, given the incoming Trump administration, Pick replied simply: “The biggest risk is some combination of geopolitics and policy error.”
His view is that the U.S. economy is growing. The question, however, is if inflation will overheat and stifle growth due to underlying inflationary factors, such as de-globalization and the potential for tariffs, Pick added.
U.S. President-elect Donald Trump had threatened to impose 60% tariffs on Chinese imports to the U.S., as well as a 10%-20% tariff on global imports.
Morgan Stanley chief economist Seth Carpenter told CNBC on Wednesday that Trump’s proposed tariffs will dent U.S. economic growth going into 2026.
On the other hand, China is battling with deflation and a lack of consumer confidence in the country, Pick said, noting that China has enacted measures like lowering mortgage rates and interest rates in order to stimulate the economy.
As such, he added that both sides have a “mutually unified motivation” to find solutions that can be “pro-growth” for both economies.
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