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Morgan Stanley bets on the American consumer

American consumers have more money than most people think, but they are just spending it differently, said Adam Parker, chief U.S. equity strategist at Morgan Stanley.

"I don't really have to worry about where the consumer is spending it," he said Tuesday on CNBC's "Squawk on the Street." "I just have to make sure they use their plastic, and it seems to be part of the American way."

Parker said Morgan Stanley is betting big on credit card companies. He said the classic way of gauging the retail sector by looking at the stores in the mall is outdated.

"That's missing the huge Internet presence," he said. Parker also noted that the retail companies that are missing expectations have small amounts of revenue, while big names in home improvement are "growing OK."

"I think the consumers are actually in pretty good shape here in the U.S .and we're overweight consumer discretionary to try to play that theme."

Paul Trussell, Deutsche Bank retail analyst, said the retail space is a very competitive environment for all companies.

"The general retail environment has certainly surprised us all. I think you have to be extremely selective, especially when it comes to the mall and apparel."