Opinion: Tariff Pressure Easing Provides Fed with Room to Cut, Economic Recession Risk Now ‘Significantly Lower’

BlockBeats News, May 13th, Morgan Stanley's Chief Investment Officer Wilson (Mike Wilson) believes that the historic sell-off triggered by Trump has ended. He reiterated his prediction that the S&P 500 Index will reach 6,500 points by the end of the year (a 12% increase from the current level) and pointed out that the easing of tariff pressures has created room for the Fed to cut interest rates, which will directly benefit stocks and other risk assets.

Wilson stated, "If the tariff threat diminishes, the Fed can rebalance its dual mandate. Although the growth outlook is somewhat optimistic, the policy scale may tilt more towards stimulating the economy rather than suppressing inflation." He particularly emphasized that with the weakening of the US dollar and the progress of US-China negotiations, the risk of an economic recession has been "significantly reduced," and corporate profit expectations have improved accordingly: "From a ratings adjustment perspective, the second half of the year is likely to outperform expectations, especially since the first half of the year was just too bad." (FXStreet)