05-11-2022, 09:07 PM
Quote:Not that anyone has seen what 2022 had in store — the worst bond market performance in decades, a surge in commodities, a war in Ukraine — but Morgan Stanley’s outlook was closer to the mark than most, certainly better than the other Wall Street firm with Morgan in its name. It came into the year flagging mid-to-late cycle challenges, warning about high valuations, tightening policy and inflation higher than most are used to. All of that sounds about right. From the archive: Here’s what Wall Street analysts see for the U.S. stock market in 2022
The bank is still banging that drum. “With strong labor markets, tightening policy, a flat curve, and our economists forecasting slower global growth with a downside skew, we think that a ‘late-cycle’ flavor to the market continues, supporting light overall positioning and a premium for portfolio defense/diversification,” say the strategists led by Andrew Sheets. In practice, that means Morgan Stanley expects the S&P 500 SPX, +0.25% to keep falling, to 3,900 by the second quarter of 2023, though it’s more optimistic elsewhere. Its top trade recommendation is being long Japanese equities, as the firm says recent currency weakness should boost Japanese corporate earnings. Morgan Stanley's done better than most forecasting markets during this turbulent year. Here's what it says is coming next. - MarketWatch