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Morgan Stanley CEO James Gorman says two changes have happened recently that \u201creally matter\u201d to the economy. The executive explained that inflation has clearly peaked and China has made a \u201cmajor, major pivot\u201d economically.<\/strong><\/p>\n The chairman and CEO of global investment bank Morgan Stanley, James Gorman, discussed the U.S. economy and China\u2019s relationship with the U.S. in an interview with CNBC Thursday in Davos, Switzerland.<\/p>\n \u201cTwo things have changed recently that really matter,\u201d he began, noting that the first concerns inflation while the second concerns China\u2019s recent pivot economically.<\/p>\n \u201cThe inflation numbers are better,\u201d the Morgan Stanley chief said, emphasizing:<\/p>\n Clearly, inflation peaked. That\u2019s no longer a question. It\u2019s a fact.<\/p>\n<\/blockquote>\n He added that the question is can the Federal Reserve get to its 2% inflation target and \u201chow hard will they try to get to 2% vs. stabilizing around 3%, 4%.\u201d<\/p>\n Regarding the Fed hiking interest rates, Gorman pointed out: \u201cWe were on a 75-basis point track. We then quickly moved to 50.\u201d At the next Federal Open Market Committee (FOMC) meeting, he expects the Fed to increase rates by 25 basis points, stating: \u201cI could see them doing 25, followed by 25, followed by a pause. I mean, that\u2019s not implausible.\u201d<\/p>\n Gorman explained that another important change that has happened recently concerns China. He described:<\/p>\n The second thing that happened is China has made a major, major pivot. Now the focus was on the reopening which was obviously critical.<\/p>\n<\/blockquote>\n \u201cThe recent pivot economically, the relationship thawing with the U.S., the meeting \u2026 with the vice premier and Secretary Yellen \u2014 this is a big deal,\u201d the Morgan Stanley CEO continued.<\/p>\n U.S. Treasury Secretary Janet Yellen met with China\u2019s Vice Premier Liu He on Wednesday \u201cas part of efforts to deepen communication and work together to address global challenges,\u201d the Treasury explained last week. In November last year, President Joe Biden and President Xi Jinping also met in Bali and \u201cagreed to empower key senior officials to engage in these issues,\u201d the Treasury further noted.<\/p>\n \u201cUnder President Xi\u2019s mantra of common prosperity, there are two ways to achieve that,\u201d Gorman detailed, concluding:<\/p>\n One is by redistribution of existing prosperity, so everyone gets a piece of the pie. The other is by growing the pie so everybody gets a piece of the pie. They have pivoted, I think, from the former to the latter. That is good news for global growth.<\/p>\n<\/blockquote>\nMorgan Stanley\u2019s CEO on U.S. Economy and Inflation<\/h2>\n
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\u2018China Has Made a Major, Major Pivot\u2019<\/h2>\n
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