Morgan Stanley: Resist the temptation to exit, though the current U.S. stock market is like a "wild bull", its foundation is solid.

Jim Lacamp, Senior Vice President of Morgan Stanley Wealth Management, emphasized in an interview that despite the current market volatility, investors need to resist the temptation to exit the stock market. He vividly likened the current market environment to a "rodeo with bulls" - this imagery stems from the rapid policy shifts and unpredictable developments, much like the fierce and uncontrollable posture of a bull in the arena. However, Lacamp specifically pointed out that beneath the surface chaos lies structural support: the macroeconomic fundamentals remain strong, providing solid reasons for investors to stay in the stock market. He explained that the drastic fluctuations caused by policy changes - such as the repeated implementation and reversal of tariff policies - often make it difficult for investors to hold on to their original positions. "In the context of a continued decline in interest rates, steady corporate earnings growth, the Federal Reserve in a rate-cutting cycle, and the stock market approaching historical highs, the probability of a deep bear market is extremely low," he further pointed out. "Despite the current market turbulence, I must emphasize to investors: do not easily exit the market at this moment." Lacamp stressed that the significant expansion of market breadth is strong evidence of underlying strength. Although in recent years the "Big Tech Seven" - Alphabet Inc. Class C (GOOGL.US), Amazon.com, Inc. (AMZN.US), Apple Inc. (AAPL.US), Meta Platforms (META.US), Microsoft Corporation (MSFT.US), NVIDIA Corporation (NVDA.US), and Tesla, Inc. (TSLA.US) - have almost monopolized earnings growth, like "the only clean shirt in a laundry basket full of dirty laundry," he observed that multiple industry sectors are currently showing expansion simultaneously. Specifically, biotechnology stocks, bank stocks, natural resource stocks, as well as small-cap and mid-cap stocks have actively participated in the current market rebound, further verifying the widespread distribution and continued strengthening of market momentum. The relaxation of regulations is particularly beneficial for small businesses, and this positive expectation is fully reflected in earnings data. Lacamp cited market forecasts indicating that mid-cap earnings are expected to grow by 17% this year, while small-cap stocks are projected to achieve a significant 19% growth - he particularly emphasized that this is a "significant turning point compared to the sustained underperformance of similar sectors in the past few years." However, Lacamp acknowledged that significant risks still exist - he vividly likened them to the "broad flat fat tail of a rodeo bull," implying the huge uncertainty lurking beneath the seemingly stable surface. He further analyzed that the current government is trying to walk a tightrope between "keeping the economy running as fast as possible" and "maintaining conditions for the Federal Reserve to continue cutting rates," a policy path he described as "extremely narrow" and could easily become unbalanced. Regarding potential political interference, Lacamp clearly stated that if the Supreme Court ruled the existing tariff policy illegal, it would actually be a "buying opportunity." He further emphasized: "My core concern is whether we can effectively control inflation levels and whether we can continue the current rate-cutting cycle while maintaining economic momentum."