Morgan Stanley Insights

[Fearchar]

Lisa Shalett article: Good Pause or Not?

• FED will probably "pause" starting with June meeting.
• 9 FED hiking cycles in last 50 years
• In 7 of the 9 cycles, equities fell after the first cut
• Decline averaged 23% from final hike
• Exceptions were 1989 and 1995 when economy had already cooled
• Unemployment was over 4% back then in contrast with current 3.4%
• Inflation was <3% vs today's 4.9%
• Yield curves were normal in 89/95 vs todays steep inversion
• Current situation is not similar to 1989 or 1995

Conclusions:

• Bullish scenario is not plausible
• Expect volatility
• Look for income opportunities in Stocks and Bonds

[uncleharley]

I just have to mention that the Nasdaq 100 just set a 9 month high. Tech is leading the market. This might be more like the 90's than they think.

[Deleted]

If tech/growth continues to lead over next cycle then US will do better than INTL, as Europe is mostly value.

[FD1000]

May 18, 2023 1:26:08 GMT Fearchar said:

Lisa Shalett article: Good Pause or Not?

• FED will probably "pause" starting with June meeting.
• 9 FED hiking cycles in last 50 years
• In 7 of the 9 cycles, equities fell after the first cut
• Decline averaged 23% from final hike
• Exceptions were 1989 and 1995 when economy had already cooled
• Unemployment was over 4% back then in contrast with current 3.4%
• Inflation was <3% vs today's 4.9%
• Yield curves were normal in 89/95 vs todays steep inversion
• Current situation is not similar to 1989 or 1995

Conclusions:

• Bullish scenario is not plausible.  FD: QQQ is up almost 27%. 
• Expect volatility.  FD: there is always volatility. Since 2018, the SP500 was down 20+% 3 times.
• Look for income opportunities in Stocks and Bonds.  FD: so far tech leads. most "experts" are parroting this for about 6 months and missed QQQ 27% YTD. The most used bond index, BND, had a huge volatility YTD, and dropped over 4% + 1.5% volatility in the last 2 months.
  
  See schrts.co/uqxGHJVa.

Bottom line: lots of explanation without actions. The past isn't the same, because markets, the economy, rates, inflation are different.

[Fearchar]

May 19, 2023 3:58:27 GMT FD1000 said:

May 18, 2023 1:26:08 GMT Fearchar said:

Lisa Shalett article: Good Pause or Not?

• FED will probably "pause" starting with June meeting.
• 9 FED hiking cycles in last 50 years
• In 7 of the 9 cycles, equities fell after the first cut
• Decline averaged 23% from final hike
• Exceptions were 1989 and 1995 when economy had already cooled
• Unemployment was over 4% back then in contrast with current 3.4%
• Inflation was <3% vs today's 4.9%
• Yield curves were normal in 89/95 vs todays steep inversion
• Current situation is not similar to 1989 or 1995

Conclusions:

• Bullish scenario is not plausible.  FD: QQQ is up almost 27%. 
• Expect volatility.  FD: there is always volatility. Since 2018, the SP500 was down 20+% 3 times.
• Look for income opportunities in Stocks and Bonds.  FD: so far tech leads. most "experts" are parroting this for about 6 months and missed QQQ 27% YTD. The most used bond index, BND, had a huge volatility YTD, and dropped over 4% + 1.5% volatility in the last 2 months.
  
  See schrts.co/uqxGHJVa.

Bottom line: lots of explanation without actions. The past isn't the same, because markets, the economy, rates, inflation are different.

Thanks FD1000,

Their conclusions are for the future, IOW a continued rally in QQQ is not plausible.
I hope you are not calling for one.

Notice too that VIX has been low of late; also symptomatic of rallies.
They are predicting a bear market and volatility is a feature of bear markets, which is what's expected.
Bond market volatility has been rather high and longer term bonds have faded, which has been the fuel for the QQQ rally.

There are both similarities and differences in our current situation compared to the past.
However, there are no bullish analogues to be found.

Rate hikes, pauses and cuts aren't always bearish, but the point here is that those that were bullish came out of the bottom of pull backs and not at the top of a 27% tech rally.

[FD1000]

My predictions are "easy", follow the markets and invest accordingly. Lucky for me since 2018=retirement, I don't have to be invested all the time.

[Deleted]

Almost all human commentators have been wrong on economy and stock markets since last 2 years or so. I am glad so far they have maintained their track record of ignorance and lack of understanding.

What is amazing is that some these people (voted top this and that 10 years in row, if you watch wealthtrack etc.) manage to be wrong 100% of the time.

[FD1000]

May 19, 2023 14:21:00 GMT @waffle2 said:

Almost all human commentators have been wrong on economy and stock markets since last 2 years or so. I am glad so far they have maintained their track record of ignorance and lack of understanding.

What is amazing is that some these people (voted top this and that 10 years in row, if you watch wealthtrack etc.) manage to be wrong 100% of the time.

Yes, over and over and over.
Actually, several known experts have been wrong for years now. I dedicated a thread to them at my site (fd1000.freeforums.net/thread/13/worse-experts-predictions)

[Norbert]

May 19, 2023 14:21:00 GMT @waffle2 said:

Almost all human commentators have been wrong on economy and stock markets since last 2 years or so. I am glad so far they have maintained their track record of ignorance and lack of understanding.

What is amazing is that some these people (voted top this and that 10 years in row, if you watch wealthtrack etc.) manage to be wrong 100% of the time.

If they're wrong 100% of the time, then it's easy. Just do the opposite.

[Deleted]

That is what I did. Went more into tech end of last year.

[Deleted]

I was just reading Carl Ichan comment on his 9 billion loss, that he always believed and said - " There is nobody who can really pick the market in short term or in intermediate term"
And this one time he himself did not follow it.

[Fearchar]

May 21, 2023 21:24:36 GMT @waffle2 said:

I was just reading Carl Ichan comment on his 9 billion loss, that he always believed and said - " There is nobody who can really pick the market in short term or in intermediate term"
And this one time he himself did not follow it.

I agree that some investors make stupid investment decisions and this includes multi-billionaires.

However, it does not follow that all experts are wrong all the time.
Nor that the particular insight of this thread is wrong.

It's a waste to time to endlessly debate the merits of other people.

[Deleted]

I agree - "It's a waste to time to endlessly debate the merits of other people."

People have their own axe to grind.

[johnsmith]

May 18, 2023 16:07:39 GMT uncleharley said:

I just have to mention that the Nasdaq 100 just set a 9 month high. Tech is leading the market. This might be more like the 90's than they think.

I get the feeling the tech rally is more hopium infused than anything else.