Latest news with #LisaShalett
AU Financial Review
14-07-2025
- Business
- AU Financial Review
ASX to rise, Wall St edges up on US-EU trade talk hopes
Australian shares are set to rally after President Donald Trump signalled he's willing to negotiate on tariffs with the European Union, easing some of the concerns stoked by the issuing of tariff letters over the last week. All three US benchmarks reversed early losses to trade modestly higher in afternoon trade. While some strategists have increased their year-end targets for the S&P 500, Morgan Stanley's wealth management investment committee, led by Lisa Shalett, is wary. 'Investors have added a new level of bravado, viewing tariffs as a nonissue.' 'With stock indexes again near all-time highs, investors appear to be stretching to embrace a Goldilocks thesis. The narrative seems to be premised on the new tax bill's support of a capex boom, with limited tariff-related growth and inflation risk. We see S&P 500 gains beyond the 6500 6600 range as difficult to achieve, however, given ongoing puts and takes.' Market highlights ASX futures are pointing up 58 points or 0.7 per cent to 8606. All US prices near 2.30pm New York time. Today's agenda The key focus will be on the prime minister and his visit to China this week. On Tuesday, there's one data print of note: the June Westpac-Melbourne Institute Consumer Sentiment measure. eToro's Josh Gilbert: The WMI 'measure is a fairly reliable watermark for consumer attitudes in the country. Sentiment has been improving month-over-month following a big dip in April. Last week, ANZ-Roy Morgan Consumer Confidence index climbed for a third straight week, up by 1.4pts to 88.6, and Westpac's June figures will probably indicate similar upward momentum'. Overseas, China is set to report second-quarter GDP and June trade, retail sales and industrial production. The US is scheduled to release June CPI at 10.30pm. Morgan Stanley: 'We see core CPI prices at 0.28 per cent in June (2.96 per cent year-over-year). We think June will show more evidence of tariff pass-through, but the overall push remains mild with some heavily tariffed goods still showing weakness. We forecast a more meaningful acceleration in July and August. Top stories Chanticleer: Plenty won't like Matt Comyn's big fix for Australia. That's OK | The CBA chief executive may cop flak for putting some of the more controversial ideas on the table to solve the productivity crisis. But it's worth the risk. | Defeated Liberal candidate Gisele Kapterian has petitioned the High Court to re-examine 'a small number' of disputed ballot papers. | Shared optimism about the technology and a promised increase in jobs and prosperity are a useful counter to rising concerns about Australia's growth prospects, writes Jennifer Hewett.
CNBC
10-07-2025
- Business
- CNBC
The new bull case for the stock market is looking past short-term risks
One way for investors to justify buying stocks now, despite all of the uncertainty in the macroeconomy, is to operate as if today's news likely won't matter much to the market in a year. Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management, said in a note to clients that there is a new "bull case" for the market emerging that considers tariffs to be a "non-event," at least partly because lower oil prices will help to offset inflation concerns. The outlook for corporate profits also gives investors a reason to wave off any negative trends in the upcoming, second-quarter earnings season. "2026 S & P 500 earnings are expected to show accelerating growth from 2025's 7-8% to 13-14% — gains come from margin expansion, tax benefits," Shalett said. Another factor Shalett mentioned is a "bad news is good news" situation with the Federal Reserve, which could deliver rate cuts if the economy starts to weaken. Shalett's theory helps explain why markets have been so calm recently despite the fact that tariff threats from the White House are ramping back up again. President Donald Trump's imposition of 50% tariffs on Brazil this week was even above the level the country faced on April 2, before the market swooned and many global tariffs were delayed. Kristy Akullian, head of iShares investment strategy for the Americas, pointed out in a commentary that July has so far been marked by low trading volumes and low volatility. "Markets have boosted their immunity to uncertainty: neither last week's passage of the [One Big Beautiful Bill Act] nor this week's tariff announcements caused the S & P 500 to budge by more than 1%. In April, policy announcements were met with 11 such days of > 1% swings. Similarly, the VIX now sits below 17; in April it spiked above 60 and averaged 32 over the month. In fact, since the local lows of April 8th, the index has rallied more than 25%, despite the overhang of unresolved trade deals," Akullian said. The VIX refers to the Cboe Volatility Index , which measures the expected moves in the S & P 500 over the next month based on options pricing. .VIX 6M mountain The Cboe Volatility Index is trading well below its highs from earlier this year. Of course, the line between confidence and complacency can be a thin one for investors. Charles Schwab chief investment officer Liz Ann Sonders told CNBC that she sees more downside risk than upside for equities and highlighted a curious divergence in different markets at the moment. "Generally, you've been in this kind of lower yield backdrop since the latter part of May, suggesting that the bond market is pricing in less economic growth. Yet the cyclicals within the equity market are pricing in more economic growth. I think that there's just mixed messages coming from various markets," Sonders said. – CNBC's Michael Bloom contributed reporting.
Yahoo
02-07-2025
- Business
- Yahoo
Stock market closes out chaotic quarter on a high note as S&P 500 notches another new record
The S&P 500 and hit new highs Monday, ending a turbulent quarter that saw a near-bear market two months ago. Monday's U.S. stock market close marked fresh highs for multiple indices, a sharp departure from previous months as one of the most chaotic quarters for equities in recent memory came to an end. The second quarter began on an historically tumultuous note, with President Donald Trump's April 2 announcement of sweeping tariffs sending stocks into free fall and the bond market into turmoil, and putting the U.S.'s global economic dominance at risk. Since then, though, the market has steadily climbed and climbed, as investors shake off concerns about the policies and focus on the news they want to see, like potential tax cuts. In fact, the S&P 500 and Nasdaq both hit all-time highs Friday after Trump said that the U.S. signed a trade deal with China. The momentum continued Monday, with the S&P 500 and Nasdaq notching new all-time highs and increasing 0.52% and 0.47%, respectively, from Friday's session. The Dow Jones Industrial Average ended the day up 0.63% (though not in record territory). 'As markets reach new all-time highs—even with economic surprises at an 11-month low and geopolitical and tariff-related uncertainties lingering—equity investors appear to have entered another 'bad news is good news' phase, with the focus shifting to potential rate cuts, tax incentives, and deregulation,' says Lisa Shalett, chief investment officer of Morgan Stanley Wealth Management. The upward swing comes as inflation stabilizes and earnings trend higher. That said, some analysts and economists point to other potential cracks. 'Arguably, the S&P 500 just returning to its previous record is not enough,' writes Hubert de Barochez, senior markets economist at Capital Economics. He notes that while larger company stocks look good, the Russell 2000, an index of U.S. small caps, is still below its record high, and the index of so-called Magnificent Seven tech stocks, including stalwarts like Amazon, Apple, and Tesla, has also not surpassed its previous high. That said, shares of Meta—one of the Mag Seven stocks—hit a record high late Monday, after CEO Mark Zuckerberg announced a restructuring of the company's artificial intelligence group. More volatility is possible. Next week, the president's 90-day tariff pause is set to expire, and deals with many countries have yet to be made. There is also uncertainty surrounding the Republican tax bill that would add nearly $3.3 trillion to deficits over a decade and whether it can make it through both chambers of Congress this week. And analysts say inflation related to tariff policies has yet to be seen in the official data. 'We think that the high level of uncertainty, which notably stems from Trump's chaotic policymaking, will prevent the S&P 500 from rising as quickly as it has recently,' writes de Barochez. 'The impending expiration of tariff 'pauses' may spark another boot of volatility in the markets.' This story was originally featured on Sign in to access your portfolio
Yahoo
29-06-2025
- Business
- Yahoo
This Top Warren Buffett Holding Could Outperform the S&P 500 in the Second Half of 2025, According to Certain Wall Street Analysts
Warren Buffett has consistently sold more stocks than he bought over the last 30 months. The biggest challenge is that many of the biggest companies in the market have high valuations and low expected returns. This investment is low-risk and offers good value right now. 10 stocks we like better than S&P 500 Index › Warren Buffett is widely regarded as one of the greatest investors of all time. He has a public track record of over 70 years to back that up, generating massive market-trouncing returns over that time. His company, Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) has continued to outperform the S&P 500 (SNPINDEX: ^GSPC) in 2025. That's despite the fact that Buffett's retirement announcement in May has somewhat deflated the premium investors are willing to pay for shares. That speaks to the strength of Buffett's portfolio of investments, including owned and operated businesses, marketable equities, private issues, and bonds. While Buffett expects everything his company buys to outperform over the long run (why else would he buy it?), one of Berkshire's biggest holdings looks particularly well-positioned to do so in the near term. That's backed up by analysis from Morgan Stanley's team of market analysts led by Lisa Shalett. Here's the Buffett investment that could outperform over the rest of the year. It's worth pointing out that Buffett has had a hard time identifying great opportunities in the stock market recently. Not only that, but he's consistently sold many of Berkshire's biggest marketable equity holdings, including Apple (NASDAQ: AAPL), Bank of America (NYSE: BAC), and Citigroup (NYSE: C). That said, Buffett hasn't said that he sees significant challenges developing at any of those companies. Apple notably remains Berkshire's largest marketable equity holding, accounting for about 21% of the portfolio. Bank of America remains third in line with more than 10% of the $283 billion portfolio invested in the bank stock. Buffett did cut Citi entirely, though. The challenge for Buffett in holding those stocks appears to be a matter of valuation. Apple's price-to-earnings ratio when Buffett made Berkshire's initial investment in the stock was between 10 and 11.3. Today, it trades for 31 times trailing earnings, and it consistently traded higher throughout the second half of last year. When it comes to bank stocks, Buffett has mentioned that the new accounting rules requiring banks to mark assets to market make it difficult to assess the financial reality of their balance sheets. As a result, he's less comfortable holding companies like Citi, and he's slowly selling off harder-to-value financial stocks. It's not just those three that Buffett's been selling. In fact, Berkshire's been a net seller of stocks for 10 straight quarters. Total sales during that period add up to more than $174 billion in excess of Berkshire's stock purchases. While some of that cash went toward paying a record corporate tax bill last year, the vast majority has gone into a single investment vehicle: short-term U.S. Treasury bills. Berkshire Hathaway held over $314 billion of U.S. Treasury bills as of the end of the first quarter. Morgan Stanley analysts think that's a smart place to stash cash in the current financial market environment. In fact, they think there's a good chance T-bills outperform the S&P 500 through the end of the year. One of the biggest reasons analysts think government bonds offer a better investment than the S&P 500 right now is that the premium investors get for taking on the risk of equities is extremely low. Shalett and her team say the equity-risk premium sits near a 20-year low. With the earnings yield (the inverse of the price-to-earnings ratio) on the S&P 500 sitting around 4.7%, that's not a lot higher than the 4.3% investors can receive on 10-year Treasuries. One-month to six-month yields also range between 4.1% and 4.3% as of June 25. Meanwhile, there seems to be a lot of risk involved with buying equities right now, considering the ongoing conflicts in the Middle East and unpredictable U.S. trade policies. Further supporting the short-term value of Treasury bills are proposed regulatory changes, says Shalett. The Federal Reserve proposed adjusting the supplementary leverage ratio for banks. If banks can take on more Treasury bills on their balance sheets, it should support a higher debt ceiling without a rise in interest rates (thus supporting the value of current bond issues). Additionally, the Genius Act supports the creation and issuance of stablecoins, which are typically backed by U.S. Treasuries, adding more bidders to the auction. But it's important for investors to keep in mind that these are short-term factors. The equity risk premium is unlikely to stay this low for very long, especially if the above factors and the Fed's plans to eventually lower the Fed Funds Rate push yields lower over time. Despite the fact that Buffett has more money in Treasuries than marketable equities right now, he'd still prefer Berkshire's money to go into stocks. "Berkshire shareholders can rest assured that we will forever deploy a substantial majority of their money in equities," Buffett wrote in his 2024 letter to shareholders. The challenge for investors is finding good value in the current market. That's an even bigger challenge for Buffett, who's not very interested in opportunities where he can only invest a few billion dollars. The good news for smaller investors is that small- and mid-cap stocks trade at much more attractive valuations than large-cap stocks. So, while the large-cap S&P 500 index doesn't look that attractive right now, there are plenty of opportunities among smaller companies. Before you buy stock in S&P 500 Index, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and S&P 500 Index wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $713,547!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $966,931!* Now, it's worth noting Stock Advisor's total average return is 1,062% — a market-crushing outperformance compared to 177% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 23, 2025 Bank of America is an advertising partner of Motley Fool Money. Citigroup is an advertising partner of Motley Fool Money. Adam Levy has positions in Apple. The Motley Fool has positions in and recommends Apple, Bank of America, and Berkshire Hathaway. The Motley Fool has a disclosure policy. This Top Warren Buffett Holding Could Outperform the S&P 500 in the Second Half of 2025, According to Certain Wall Street Analysts was originally published by The Motley Fool Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Mint
29-06-2025
- Business
- Mint
Bonds have underperformed. Why you should own them now.
Bonds have been hard to love in recent years—but they are getting easier to appreciate. Over the past decade, bonds have barely mustered a 2% annual return, well behind the S&P 500's 13%. And with their struggles, the asset class has found itself fighting for a place in portfolios as many individual investors and financial advisors abandon the traditional 60/40 mix of stocks and bonds and substitute alternatives like real estate, private equity or private credit for all or part of the fixed-income allocation. Take a look now. Despite all the knocks against them, bonds are having a decent year—through late June, U.S. bonds were about even with the S&P 500 as both were generating returns of close to 4%. And the outlook for the rest of 2025 looks good with the Federal Reserve poised to cut short-term rates by as much as half a percentage point and inflation running near 2%. 'Now is not the time to abandon fixed income," writes Lisa Shalett, chief investment officer of Morgan Stanley Wealth Management, who notes that bonds have generated respectable returns in 2025, despite what she calls 'tariff-related inflation risk" as well as pervasive concerns about intractably high federal deficits. Barron's has long favored stocks for income because of their growth potential, and generally low rates on bonds. But there is a case for bonds now because the earnings yield of the S&P 500—the inverse of the price/earnings ratio—is now under 5%, comparable with the yield on long-term Treasuries and municipal bonds, and below those on mortgage securities, preferred stock and junk bonds. Bonds may not carry the lofty yields of the 1990s, when Treasuries yielded 6% to 7%, but rates are way better than they have been for most of the past decade. Treasuries now yield around 4%; municipals yield 3% to 5%; preferred stock yield 6% or more; mortgage securities yield 5.5%; junk bonds yield 7%; and cash, in the form of money-market funds and Treasury bills, now yield about 4%. There are still pockets of yield throughout the stock market that comfortably exceed the 1.2% dividend rate on the S&P 500. Real estate investment trusts yield an average of 4%, energy pipelines, 3% to 7%, and electric utilities about 3%. At the start of 2025, Barron's ranked foreign high-dividend paying stocks and U.S. equity high-yielders as the favorites in our annual survey of fixed income, and relegated preferred stock and municipal bonds to near the bottom. That call looks good so far given the strength in international stocks and flattish returns in munis and some preferreds. This represents an update based on first-half performance and the outlook for the next six months: Tax-exempt bonds ranked near the bottom of returns in the fixed-income market during the first half of the year—but that offers a solid setup for the rest of 2025. Weighing on the muni market lately has been a heavy supply of new issues in the first half of June, but longer term, the outlook looks better. Single-A and double-A bonds now yield from 4.5% to 4.75%, just a touch below those on 30-year Treasury bonds at 4.85%. The tax-equivalent yield on those munis is over 7%. 'The underperformance has created attractive relative value," says Anders Persson, CIO of global fixed income at Nuveen. Investors have favored exchange-traded funds like the $39 billion iShares National Muni Bond, but active managers can find value in the opaque and heterogenous $4 trillion market. Many individuals still prefer to buy individual municipal bonds and clip coupons. For residents of high-tax states like New York and California, consider long-term debt from the Los Angeles Department of Water and Power or Triborough Bridge and Tunnel Authority, which now yield about 4.75%. Intermediate-term munis aren't as appealing relative to Treasuries based on relative yields, but there is less rate risk. The $77 billion Vanguard Intermediate-Term Tax-Exempt fund yields about 3%. Non-investment-grade muni funds like the $13 billion Nuveen High Yield Municipal Bond fund now yield over 5%. There has been some concern that the tax bill making its way through Congress could curb the muni tax exemption. BofA analysts Yingchen Li and Ian Rogow wrote on Friday that they are optimistic the exemption will 'survive" the negotiations between the House and Senate. Dividend payers still look like a solid way to generate income. Right now, investors can get yields of 2.5% or more plus dividend growth and capital appreciation. Not all dividend strategies are created equal. The $60 billion Vanguard High Dividend Yield ETF has returned 4% this year, in line with the S&P 500. The $68 billion Schwab US Dividend Equity ETF, however, is down 1%, while the ProShares S&P 500 Dividend Aristocrats ETF, which owns companies with at least 25 years of annual dividend increases, is up 2%. Healthcare stocks are worth a look for contrarian investors with the sector at its lowest relative level to the S&P 500 in 25 years. Among big stocks, Merck yields 4%, Pfizer, 7% and UnitedHealth Group 3%. Hurt by tough consumer trends, food stocks have rarely been more disfavored and offer ample—and likely secure—yields. General Mills yields almost 5% and Kraft Heinz yields 6%, with both stocks near 52-week lows. International high yielders came to life this year as overseas markets rallied and the dollar dropped. The trend likely has staying power following many years of underperformance relative to the U.S. Overseas companies favor dividends over stock buybacks, resulting in widespread 3%-plus dividends. Investors can do better. The Schwab International Dividend Equity ETF yields 4% while the iShares International Select Dividend ETF is at 5%, even after gaining 28% this year. Pipelines do the boring work of transporting oil and natural gas from one place to another. But they also represent a backdoor play on the AI boom since they provide the fuel that generates the electricity to power data centers. Barron's highlights Kinder Morgan in the current issue as a gas play that is cheaper than industry leader Williams Cos. Kinder Morgan yields 4%. Kinder Morgan, like most U.S. pipelines, is a corporation. More yield is available, however, in stocks like Enterprise Products Partners and Energy Transfer, which are structured as partnerships that generate cumbersome K-1 tax forms. The result is 7% yields on the pair, against 3% to 5% yields on corporate pipelines. The partnership-heavy Alerian MLP ETF yields 8% Regardless of the structure, pipelines often get too little attention from investors. 'The sector continues to be under owned and underappreciated. It's critical to the economy and AI," says Rob Thummel, a senior portfolio manager at Tortoise Capital, which runs the Tortoise Energy Infrastructure closed-end fund. The fund now yields 10% and trades at a 7% discount to its net asset value. Large holdings including Williams, Targa Resources, and Energy Transfer. Agency mortgage-backed securities offer the combination of nice yields and high credit quality. Fannie Mae and Freddie Mac mortgage issues now yield more than 5.5%, about 1.3 percentage points above the 10-year Treasury. That 'spread" is now wider than the long-term average and compares with less than a percentage point yield pickup for high-grade corporates. The Simplify MBS ETF buys new mortgage issues and yields 6%, while the larger iShares MBS ETF, which holds a lot of lower-rate securities, yields 4%, but has more capital appreciation potential. The DoubleLine Total Return Bond fund holds a mix of agency and higher-yielding nonagency issues that do carry some credit risk. Run by veteran manager Jeffrey Gundlach, the fund yields about 5.7%. Private real estate is attracting more interest from financial advisors but there's a strong case to be made for the public REITs, which offer some of the industry's best assets and management teams, plus liquidity and transparency. The sector is flattish this year based on the total return of the Vanguard Real Estate ETF, which offers broad industry exposure and yields nearly 4%. Though the apartment sector is in the red this year, it is expected to benefit in the coming years from reduced supply. Big operators like AvalonBay Communities, Mid-America Apartment Communities, and Equity Residential yield in the 3% to 4% range. Prologis, the leading warehouse owner, is trading close to where it was five years ago and yields almost 4% Piper Sandler analyst Alexander Goldfarb is partial to SL Green Realty, which yields 5% and is one of the two leading New York office REITs. Its shares fell 6% this past week on concerns about the prospect of socialist Zohran Mamdani winning the mayoral election in November. Goldfarb likes SL Green's focus on the hot market around Grand Central Terminal. One popular area outside of traditional bonds are high-grade collateralized loan obligations, derivatives usually packaged out of junk-quality loans. They have produced higher returns than major bond indexes in recent years with higher credit quality. The Janus Henderson AAA CLO ETF, which yields 6%, has attracted $20 billion since its inception almost five years ago and produced 7% annual returns over the past three years, against 3% for the iShares Core U.S. Aggregate Bond ETF. The newer Nuveen AA-BBB CLO ETF dips down in credit quality and has a 6.5% yield. The iShares Flexible Income Active ETF holds CLOs, as well as a raft of other asset classes with higher yields including junk debt, emerging market bonds, and commercial mortgage securities. Run by BlackRock's head of fixed income Rick Rieder, it has returned 8% annually since its inception in 2023 and now yields over 6%. The combination of yield, security, liquidity, and tax benefits has helped preferred stock gain a following among many income-oriented buyers. There are two main types of preferred: $25 par securities that generally trade on the NYSE or Nasdaq, and $1,000 par securities that mostly trade over the counter like bonds. The $25-par market, which is geared toward retail buyers, was richly priced at year-end, but has since gotten more reasonable after suffering a 1% loss including reinvested dividends based on the iShares Preferred and Income Securities ETF. Banks are the major issuers in the $300 billion market and their $25-par issues now yield around 6%. Consider preferreds with below-market dividends of 4% to 5% since those offer more upside potential if rates fall. Another bonus: Most preferred dividends are taxed like common stocks at a top federal rate of 20%, while corporate bond interest is taxed at income-tax rates. For those comfortable with Bitcoin, there are three high-rate preferreds from Bitcoin holder MicroStrategy, including the recent deal known as STRD for its ticker now yielding 11.5%. Doomsayers assert reduced foreign demand and the prospect of $2 trillion annual budget deficits will inevitably lead to higher rates on government bonds. But the Treasury market has held up well this year and the reason could be relatively high yields relative to the 2% inflation rate. The yield on the benchmark 10-year Treasury note is down about a quarter percentage point to 4.30% this year, resulting in a total return of 5% on the iShares 7-10 Treasury Bond ETF. Long-term Treasury yields at around 4.85% are slightly higher this year and the result is that the popular iShares 20+ Year Treasury Bond ETF has returned just 2%. Barron's wrote recently that Treasury inflation-protected securities, or TIPS, are a good alternative to regular Treasuries. They sport break-even yields of around 2.30%, meaning that if inflation runs higher than that, investors will do better in TIPS versus run-of-the-mill Treasuries. The best value in TIPS are 30-year securities offering a real, or inflation-adjusted, yield of 2.5%. The big iShares TIPs ETF, has an average maturity of around seven years, while the Pimco 15+ Year U.S. TIPS Index ETF offers exposure to the longer end of the market. Cash isn't just a parking place. It's an asset class and an alternative to bonds for risk-averse investors. Money-market funds and Treasury bills now yield around 4%, exceeding the inflation rate by about two percentage points. The challenge is that short rates are likely headed lower. But even a half-point drop by year-end would still leave cash yields in the 3.5% to 3.75% range. T-bill ETFs are a good alternative to money-market funds because of higher yields, high credit quality, monthly income and generally lower fees. T-bill ETFs have sucked in a record amount of cash this year as individuals emulate Berkshire Hathaway CEO Warren Buffett who has put over $300 billion of the company's cash into T-bills and holds virtually no bonds. The $50 billion iShares 0-3 Month Treasury Bond ETF yields about 4.2% and has an expense ratio of just 0.09%. Investors can buy Treasury bills at weekly auctions through the TreasuryDirect website and banks and brokers. The six-month T-bills to be auctioned Monday will mature in early January, allowing holders to defer paying taxes on the interest income until 2027 since T-bill interest is paid at maturity. Write to Andrew Bary at
