By Michael Wilson, Chief US equity strategist at Morgan Stanley
Along with many of my colleagues, I spent the last week at our Asia Pacific Summit in Singapore, one of our largest and most global client conferences of the year. It coincided with the release of our 2025 outlooks for economics and strategy (full set available here for pro ZH subs) providing a good forum for us to engage with a wide range of clients on these newly published views. While there was plenty of debate about how to position for 2025, I heard overarching agreement that America remains the best place for equity investors to be.
Despite the S&P 500’s near-record-high valuations, the consensus view remains that they are justified by the also-high ROE and better growth profile – the definition of high quality. To be clear, high-quality stocks are expensive outside the US too, and America doesn’t have a monopoly on these names. However, the US has more of them, which explains why the quality metrics for the S&P 500 are much stronger than for non-US indices. As one client told me, “Ten years ago, for every five high-quality US companies, I could find one outside the US; now that ratio is 10 or 15 to 1.”
