Investors haven't yet readjusted their portfolios to reflect strong US macro data, creating an opportunity in financial stocks, says Morgan Stanley.

Brazil’s economy is growing faster than expected and stocks are cheap, said Morgan Stanley strategist Nikolaj Lippmann. Just don’t expect that to translate into a rally in equities, he warned.

Investors are currently focused on defensive trades, missing out on the strength of the economy, according to a report from Morgan Stanley. The firm has identified significant opportunities in underappreciated sectors,

Caterpillar’s (NYSE:CAT) shares fell 2.5% in premarket trading Monday after analysts at financial-services firm Morgan Stanley downgraded the maker of heavy equipment to Underweight from a previous investment rating of Equal weight.