• Seth Golden posted an update 3 weeks ago

    Morgan Stanley`s so-called “three wise men”!
    1. Chetan Ahya: “This is an uncertain pause – no immediate escalation, but still no clear path towards a comprehensive deal…as things stand, we lack clarity on whether real progress was achieved on the sticking points that caused talks to break down in the first place…hence, our overarching conclusion is that the developments over the weekend on their own don’t do enough to remove the uncertainty created by trade tensions.”

    2. M. Zezas: “…there’s no indication of progress on key sticking points. An uncertain pause doesn’t do enough to remove the overhang. After the initial reaction, we see the most upside to EM fixed income, and the most downside to US HY credit, US equities and the dollar…We could be wrong if, in the coming weeks, evidence of substantive progress emerges on key points of intellectual protection, tariff and non-tariff action and deficit reduction. We are watching three signposts: 1) Whether meetings and calls resume; 2) Revelation of details that show key issue gaps are closing; and 3) Domestic pushback in both countries.”

    3. Wilson: “…we see further momentum unwind as rising recession risk hurts the long side of the factor…we would fade this rally in junk/value/cyclicals and see even greater risks of an unwind of the long side of momentum…This time around, we think the setup is similar except that economic data like ISMs are already headed lower now in contrast to some positive momentum last November. An accommodative Fed could cushion the blow, but likely won’t prevent it…the second half of the year tends to be a seasonally weaker time for earnings revisions and the underperformance of seasonality in revisions seen year to date is not an encouraging sign. If management teams hold out hope for a recovery by linking growth to a resolution on trade, we think it just delays the disappointments and the market likely will not buy it like it did in January

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