A customer shops as bottles of Coca-Cola Co. brand soda sit on display for sale.
Christopher Lee | Bloomberg | Getty Images
Trade tensions and the 2020 presidential election will add even more uncertainty to the aging U.S. economic recovery, making surefire defensive stocks and consumer staples more attractive investments, according to Morgan Stanley.
Chief U.S. equity strategist Michael Wilson told clients in a note Monday that expectations of “disappointing” S&P earnings next year should allow companies like Coca-Cola, Lowe’s and McDonald’s to outperform the broader market.
“Trade, the election, and a late cycle economy keep the market searching for new leadership amid high uncertainty,” Wilson wrote.
“We expect the market to vacillate between a pro-cyclical outcome and a defensive one as data comes in and trade tensions and the election evolve,” he added. “We slightly favor the more defensive outcome given our well below consensus forecast for S&P 500 earnings growth next year.”