Morgan Stanley chief cross-asset strategist Serena Tang says the firm remains constructive on risk assets for the rest of 2026 despite growing uncertainty tied to geopolitics, energy prices and credit markets.
In a new Thoughts on the Market podcast episode, Tang says the bank expects the US economy and corporate earnings to remain resilient, while artificial intelligence (AI) spending continues to drive a major investment cycle across industries.
Tang says the current macro backdrop still supports risk assets.
“Across markets, macro and micro fundamentals support risk assets. In the US, growth should hold up.”
The strategist also highlights Morgan Stanley’s bullish forecast for US equities and earnings growth.
“Our US Equity Strategist’s S&P 500 target for mid-2027 stands at 8,300, supported by expected earnings growth of 23 percent in 2026 and 12 percent in 2027. The momentum is coming from improving earnings.”
Tang notes that AI-related investment in data centers, chips, power systems and networks is expected to remain a dominant force across markets, though the spending boom could also pressure credit markets as companies issue more debt to finance expansion.
Morgan Stanley says it continues to favor US equities over core fixed income.
“That’s why we recommend a balanced allocation with a risk-on tilt: overweight equities, underweight core fixed income, and hold other fixed income, commodities and cash at benchmark weight. Within equities, we favor the U.S. because earnings look strong and the risk-reward looks better than in other regions. Europe and Japan also offer upside, but Europe has more exposure to energy disruptions, and emerging markets lack a broad macro and micro narrative despite pockets of strength.”
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