• Seth Golden posted an update 3 weeks, 3 days ago

    Morgan Stanley u-turning on Equities: now bullish….
    1. Global Cross-Asset is UPGRADING Equities:

    “After almost 18 months of decelerating global economic activity, Morgan Stanley’s global economics team expects growth to bottom in 1Q20 and improve thereafter…The improvement will be modest compared with past recoveries, and will be a mini-cycle recovery in the context of a late-cycle expansion, but it means that a recession next year would be avoided…We think that sequencing the cycle should boost EM currencies and weaken USD. We think it will keep US yields range-bound near 2% while yields in the UK and Germany rise.”

    2. US Econ points to a stronger / more stable US:

    “In 2020, the economy grows more slowly as the bulk of the positive lift from lower interest rates will have been absorbed and households balance higher income with higher prices as a result of tariffs. But the economy is on stronger footing, with less external drag, sustained easy monetary policy, and continued support from fiscal policy. Business investment, which slowed sharply in 2019, should make a tepid comeback in 2020.”

    3. US Equity Strategy raises S&P targets by 10% / sees a muddle-through scenario in 2020:

    “As the Fed continues expanding its balance sheet by $60B/mo., the S&P 500 could overshoot the upper end of our year-end bull case of 3,250. However, we expect that by April, the liquidity tailwind will fade and the market will focus more on fundamentals…At this stage, we could see growth surprising to the upside or the downside, depending on a number of potential outcomes on trade and rates. After the recent rally, equity markets are now pricing a modest recovery, so upside is limited.”

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