Investing Through an Uneasy Boom

Summary

Serena Tang, Morgan Stanley's Chief Cross-Asset Strategist, presents a mid-year outlook urging investors to stay constructive on risk assets in 2026 despite energy and geopolitical volatility. She favors US equities over bonds, citing strong earnings and AI-driven capital spending, while warning of potential credit market pressure from increased corporate borrowing.

• Serena Tang recommends a constructive but not complacent stance for 2026.
• US equities are favored with an S&P 500 target of 8,300 by mid-2027.
• Earnings growth is strong, with median S&P 500 Q1 surprise at 6%.
• AI infrastructure spending is projected to reach ~$800 billion in 2026 and $1.16 trillion in 2027.
• Rising corporate bond issuance to fund AI investment may pressure credit markets.
• Energy prices and geopolitics, especially Strait of Hormuz risks, are key uncertainties.
• Recommended allocation: overweight equities, underweight core fixed income, hold other assets at benchmark.