- Mike Wilson told CNBC that the stock market is signaling a “pretty darn good” economic recovery in 2021.
- The Morgan Stanley chief US equity strategist said that how the economy gets to this recovery is irrelevant.
- Wilson recommended investors buy companies that have been victims of the pandemic because those will have the most operating leverage upside in this recovery.
Morgan Stanley’s Mike Wilson told CNBC on Tuesday that the stock market is “one of the best leading indicators out there,” and that it’s signaling an economic recovery in 2021.
“The market is telling us, in no uncertain terms, that 2021 is going to be pretty darn good from a recovery standpoint,” the chief US equity strategist said. How the economy gets to this recovery, whether from fiscal stimulus or the Fed, is “irrelevant,” according to Wilson.
Wilson also said that investors will be surprised that the recovery is more powerful and broader than people are anticipating. Operating earnings will exceed what models are showing today, said the strategist.
Read more: GOLDMAN SACHS: The stocks most loved by hedge funds have smashed the market this year. Here are 15 stocks those investors flooded into last quarter.
Investors will need to examine what kind of companies will show the most operating leverage on the upside to play this recovery, Wilson added. Companies that have been “victims of the pandemic and the lockdown” will have the most leverage when compared to “COVID winners.”
In an interview with Bloomberg on August 13, Wilson also expressed his positive outlook for the economy. He said gross domestic product will be better in 2021, and recommended that investors own “COVID beneficiaries,” as well as companies that have suffered from the pandemic because, similar to his comments Tuesday, operating leverage upside will be the greatest in those companies.