May 21, 2025

Today, I learned that Morgan Stanley is warning investors about three major disconnects in the stock market. The chief investment officer at Morgan Stanley Wealth Management, Lisa Shalett, pointed out concerns about rising U.S. Treasury yields, a weakening dollar, and the outperformance of gold compared to U.S. equities since 2022. Shalett advised investors to diversify their positions and prepare for potential volatility and lower equity multiples.

In another news piece, Nippon Steel has offered to invest around $14 billion in U.S. Steel as part of an acquisition deal, a significant increase from the initial investment pledge. The deal is under review by CFIUS, and President Trump will have to make a determination by June 5. The outcome of this deal could set a new precedent for M&A transactions involving foreign companies.

Additionally, Pfizer signed a licensing deal with Chinese biotech 3SBio for a cancer drug, involving a substantial upfront payment and potential earnouts. This deal underscores the continued globalization of the pharmaceutical industry despite trade tensions. The agreement grants Pfizer rights to a bispecific drug candidate for cancer treatment, highlighting the importance of international collaborations in the healthcare sector.

I recently read about the issues surrounding financial services regulation and enforcement being pulled back. Lawyers at Cooley are exploring various topics such as bank partnerships, payment processing, fair lending, and unfair and deceptive practices in a session scheduled for 5/22. Additionally, there has been a shift towards video content in the financial research industry, with UBS using artificial intelligence to create avatars of their analysts to provide clients with video summaries of reports.

Furthermore, Moody’s recent decision to downgrade the credit rating of United States government debt from Aaa to Aa1 has raised concerns about the country’s creditworthiness. This downgrade could potentially have implications on investors holding US Treasuries, especially in regions like Hong Kong where strict investment mandates require a top-tier rating for holding such assets.

Stay Well!