Morgan Stanley CEO Gorman on US Economy, China Pivot

• Morgan Stanley CEO James Gorman recently discussed the US economy and China’s relationship with the US in an interview with CNBC.
• Gorman stated that inflation has peaked and China has made a “major, major pivot” economically.
• He also said that the Federal Reserve is likely to increase interest rates by 25 basis points at the next FOMC meeting.

Morgan Stanley CEO James Gorman recently held an interview with CNBC in Davos, Switzerland in which he discussed the US economy and China’s relationship with the US. Gorman stated that two changes have happened recently that „really matter“ to the economy. The first is that inflation has peaked, and the second is that China has made a „major, major pivot“ economically.

Gorman explained that the inflation numbers are better than they were and that the Federal Reserve is likely to increase interest rates by 25 basis points at the next Federal Open Market Committee (FOMC) meeting. He also said that he could see the Fed doing 25, followed by 25, followed by a pause.

Regarding the second change, the Morgan Stanley chief noted that China has made a major pivot economically. He said that the focus was on the reopening, which was obviously critical, but that the recent pivot economically – the relationship thawing with the US, the meeting with the vice premier and Secretary Yellen – is a big deal. He also said that the US has to be careful with how it deals with China and that it is important to have a „strategic dialogue“ rather than an „adversarial dialogue“.

Overall, Gorman believes that these two changes have significantly impacted the US economy and that the Federal Reserve will likely increase interest rates soon. He also believes that having a strategic dialogue with China is key to maintaining a strong relationship between the two countries.