Ideas
Fed independence risk keeps dollar weak.
The dollar has weakened only modestly, but investors are worried about the long-term trajectory of the U.S. and the threat to Fed independence. Even if the DOJ probe fades, he does not see that as a reason to buy the dollar, and the administration's efforts to remove Powell undermine institutional integrity.
BOJ unlikely to hike; yen stays weak.
The Bank of Japan is unlikely to raise rates in the near term, especially around a snap election, and real rates remain deeply negative. Intervention may slow yen weakness but cannot reverse it unless the BOJ raises front-end rates toward 2%-2.5%, which he sees as unlikely, so the yen should stay weak.
Long-end government bond yields should rise.
Long-end yields in the U.S., Europe and elsewhere are not where they should be and should be higher given fiscal trajectories, including Japan's GDP running toward 3.6%-4%. Japanese capital providers may also slow their support for U.S. assets, reinforcing pressure on long-end government bonds.
Snap election could boost Takaichi mandate.
Prime Minister Takaichi may call a snap election to strengthen her fragile one-seat majority while her approval ratings are high. The opposition is not prepared and cannot easily defeat the LDP as a single party, but her predecessor's early election was a debacle, so the political catalyst carries risk.
Long-end govt bonds attractive versus equities.
Long-end government bonds are attractive because absolute yields are high and valuations are not expensive relative to equities. The market currently has little appetite for the long end, but if a trigger makes investors comfortable they could rotate from expensive equities into long-end government bonds.
European high yield spreads too tight.
European high-yield spreads near 260 basis points are too tight to compensate for default risk, especially with more uncertainty and no ECB QE support. She favors a very selective approach to high yield in the U.S. and Europe rather than broad exposure.
Watch Japan for yen intervention.
Japanese yields are creeping higher and yen weakness acts like a consumption tax. Verbal intervention has started, and she is seriously considering actual FX intervention, so the yen is a key monitorable.
Resilient backdrop supports S&P 500.
Despite Fed independence risk and geopolitics, the S&P 500 is still making record highs because the resilient backdrop, AI theme, greater trade certainty and fiscal/bill support remain positive. He is bullish on the index.
European equities uptrend remains intact.
European equities have had a tremendous run, including a 10-day DAX winning streak, and he would not be alarmed by a pullback. The 1%-2% selloffs are moderate by historical standards and do not signal the AI bubble bursting.
Affordability policy favors consumer staples.
With Trump focused on affordability before the midterms, food and consumer staples should benefit. Staples have already performed well because everyone must consume food and consumers cannot substitute away from it.
Orsted legal win aids offshore wind.
A U.S. judge ruled Orsted can resume building its Revolution Wind project off Rhode Island, which is about 90% complete. The decision is a legal win for offshore wind against the Trump administration, though further obstacles are likely.
Michael
Deputy Head of Global Research, Morgan Stanley
77:32
Fed takeover steepens curve, weakens dollar.
If the Supreme Court allows Lisa Cook's firing and Trump effectively controls the Fed, long-end Treasury yields would steepen substantially. Those shock-absorber trades already moved last year but have more room to run in that scenario.
Michael
Deputy Head of Global Research, Morgan Stanley
78:08
Dollar has small weakness left.
The dollar fell nearly 10% last year and he sees a little more weakness ahead, but he expects it to mostly stabilize for the rest of the year rather than fall sharply.
Michael
Deputy Head of Global Research, Morgan Stanley
80:32
AI capex spending remains underappreciated.
The U.S. may spend roughly $3 trillion on AI, with about half a trillion dollars debt-financed. Corporate balance sheets are healthy and can absorb the issuance, so overheating risk is far off and the AI capex/reindustrialization theme has room to run.
Michael
Deputy Head of Global Research, Morgan Stanley
81:34
Small/mid-cap U.S. earnings inflect.
U.S. mid-cap and small-cap stocks are showing an earnings inflection, with about 8% earnings growth versus -8% a year earlier. He attributes this to productivity gains, deregulation and AI-adopter effects.
Michael
Deputy Head of Global Research, Morgan Stanley
82:20
Mag 7 hinges on AI progress.
Mag 7 outperformance depends on the AI story. If the front-tier model builders keep delivering models with exponentially increasing intelligence, the potential ROI is still massive beyond what is priced in; if progress slows, the adopter trade may suffer.
Michael
Deputy Head of Global Research, Morgan Stanley
82:55
U.S. beats Europe on capex.
He prefers U.S. equities over Europe. The European story remains decent, but nothing is out of consensus, while the U.S. is more driven by capex, innovation and productivity that should flow through to bottom-line earnings.
Michael
Deputy Head of Global Research, Morgan Stanley
82:55
U.S. beats Europe on capex.
He prefers U.S. equities over Europe. The European story remains decent, but nothing is out of consensus, while the U.S. is more driven by capex, innovation and productivity that should flow through to bottom-line earnings.
Michael
Deputy Head of Global Research, Morgan Stanley
83:35
High yield beats investment grade.
High-yield credit should outperform investment-grade credit this year, contrary to normal expectations in this environment. The AI theme, new supply, better-than-expected fundamentals and a hot economy tactically reinforce the trade.
Michael
Deputy Head of Global Research, Morgan Stanley
83:35
High yield beats investment grade.
High-yield credit should outperform investment-grade credit this year, contrary to normal expectations in this environment. The AI theme, new supply, better-than-expected fundamentals and a hot economy tactically reinforce the trade.
Bank earnings supported by deal, loan growth.
U.S. large-cap banks are entering earnings with strong fundamentals: the best deal year since 2021, rising investment-banking fees, loan book growth at the fastest pace since 2010, and trading gains from market volatility. Major lenders have been outperforming the broader market.
JPM positioned for strong earnings.
JPMorgan is expected to report strong equity trading growth of over 31% and the fastest loan book growth since 2010, with leadership among major banks. Momentum from AI and M&A could also support forward commentary.
10-year yield likely range-bound.
Even with a strong CPI print, the 10-year Treasury yield is already at the top of its range and probably will not break out without a clear inflation reacceleration.
This Bloomberg Markets video, published January 13, 2026,
features Peter Kinsella, Brian Fowler, Marilyn Watson, Skyler Montgomery Koning, Henry Allen, Christian Fienberg, Michael, Charlie Wells
discussing UUP, FXY, Long-end government bonds, EWJ, European high-yield credit, SPY, VGK, DAX, XLP, ORSTED, SOLAR, Long-End U.S. Treasuries, AIQ, U.S. reindustrialization, MDY, IWM, MAGS, HYG, LQD, KBWB, JPM, 10-year U.S. Treasuries.
23 trade ideas extracted by AI with direction and confidence scoring.
Speakers:
Peter Kinsella,
Brian Fowler,
Marilyn Watson,
Skyler Montgomery Koning,
Henry Allen,
Christian Fienberg,
Michael,
Charlie Wells
· Tickers:
UUP,
FXY,
Long-end government bonds,
EWJ,
European high-yield credit,
SPY,
VGK,
DAX,
XLP,
ORSTED,
SOLAR,
Long-End U.S. Treasuries,
AIQ,
U.S. reindustrialization,
MDY,
IWM,
MAGS,
HYG,
LQD,
KBWB,
JPM,
10-year U.S. Treasuries
