Fed meeting: 5 Areas to Invest in Amid Coming Market Turmoil

for the Fed to let up on its hawkish stance, she said, and that's bad news for stocks. Shalett doesn't believe they are priced yet for a recessionary scenario.

"Market psychology has been shaken, setting off a dynamic that likely raises the odds of an imminent recession. Unfortunately, the Fed is boxed in. While it needs to continue interest rate hikes to combat inflation, which remains stubbornly high, recent events might better be addressed with a pause," Shalett said."The stock market needs to correct to reflect heightened risks."

Take this combined with the fact that valuations remain historically high, she said. She cited the S&P 500's price-to-sales ratio, which currently sits around the same levels it was around the dot-com bubble over two decades ago. Shalett doesn't expect the size of decline her Morgan Stanley colleague Mike Wilson sees. Wilson, the bank's chief US equity strategist, believes the S&P 500 will fall to a range between 3,000-3,300, one of the more bearish forecasts on Wall Street.

"Odds are rising for China stimulus, and growth linked to supply chains is rebounding in South Asia. We are opportunistically adding to positions there and in Latin America, which benefits from already tight central bank policy and commodity exporter windfalls," she said.Shalett also likes

Sounds like it's time to stock up on popcorn for the show!

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