Stimulus bill will be 'critical' to recovery and spur shift back to cyclical stocks, Morgan Stanley investment chief says | Markets Insider

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Stimulus bill will be 'critical' to recovery and spur shift back to cyclical stocks, Morgan Stanley investment chief says | Markets Insider
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Stimulus bill will be 'critical' to recovery and spur shift back to cyclical stocks, Morgan Stanley investment chief says

Mike Wilson, Morgan Stanley chief US equity strategist and chief investment officer, said the next stimulus bill will be"critical" to the recovery.

The chief US equity strategist and chief investment officer, said he believes the package will get passed, and could potentially be as large as $2 trillion. Wilson also said that the fiscal package will be a catalyst for interest rates to go up, which is the"key to all these trades." He further explained:"The fiscal package ironically could actually stimulate the perception that the economy will be better next year, rates shoot up, and that will affect that rotation back towards these COVID beneficiaries in the recovery stage, the cyclical type stocks that we've been recommending.

But back-end rates, however, are a function of inflation expectations and nominal GDP growth. Wilson thinks GDP growth will be better next year, causing a"big move in back-end rates."

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