Morgan Stanley said energy stocks are the most effective hedge for equity portfolios as crude prices become the market’s main near-term risk. Brent has risen 13% over the past two weeks, and strategist Michael Wilson said the risk is asymmetric because rising oil has historically been a more reliable headwind for equities than falling oil has been a tailwind. The bank said its oil-versus-equity beta over the past two months was twice as material when Brent was rising than when it was falling, meaning equities may not require a crude-price reversal so much as a halt to further increases. Morgan Stanley also warned that a renewed oil spike linked to the continued closure of the Strait could raise input costs, bond yields and volatility. Its quality-rotation call is developing as expected, with high free cash flow, high gross margin, sales growth stability and low capex-to-sales factors gaining 16%, 9%, 9% and 8%, respectively, over two months. Leadership is shifting toward services-oriented, fee-based and asset-light groups with the strongest earnings revisions, particularly Financial Services and Insurance. The bank attributed higher rates mainly to strong nominal growth rather than structural debt and deficit concerns.