Morgan Stanley Investment Management's Andrew Slimmon remains consistently bullish on stocks, even in times of volatility. The senior portfolio manager is concerned that changes in market conditions could cause “some sort of stock price correction,” but believes the stock is “plain sailing” for now. “One of the reasons I've been bullish on stocks since 2022 is because of the way we measure inflation,” he told CNBC last week.Inflation is measured on a monthly, year-over-year basis. He said there was. Mr Slimmon said year-on-year comparisons were “relatively easy” given that inflation rates in 2022 and 2023 were “very high” and that it was “natural” that inflation would be on a downward trajectory. Ta. This allows the Federal Reserve to take a “less hawkish” stance, which the stock market welcomes, he said. Last week, the US consumer price index report for April showed that inflation eased slightly in the month. However, on a 12-month basis, the CPI rose by 3.4%, in line with expectations. After the CPI release, the market reacted positively, with futures prices tracking major stock indexes rising and US Treasury yields falling. Futures traders have increased the implicit probability that the US Federal Reserve will start cutting interest rates in September. “The problem is, if you look at the numbers from May, June and July last year, the CPI numbers are way down,” Slimmon told CNBC's “Street Signs Asia.” It will get even tougher in the very near future. “So I'm concerned about whether we can recognize that the CPI, the trajectory, is no longer going down, it's becoming a little more sticky,'' Slimmon said. “I think that's when we get some kind of correction. That's why I believe by the end of the year the mark will be much higher. I wouldn't be surprised if we get a more significant correction.” But now. For now, Slimmon said things are looking up, with lower inflation and good earnings reports. A name for growth and value “I think it makes sense to be a little more defensive heading into the summer, but it's too early for that,” he said. “Try to balance growth and value names.” Netflix and Amazon are his growth candidates, and United Rentals and Waste Management are value candidates. “When you think about Netflix and Amazon, it's two things. [companies] Slimmon said Netflix offers a lot of value to customers at a relatively reasonable price. “There are a lot of places where we can expand beyond our control,” Slimmon said. “I'm betting on it,” he added. —CNBC's Jeff Cox contributed to this report.
