Morgan Stanley expects a sudden pullback in corporate earnings, which will apply the brakes to the US equity rally. The investment bank is bullish on South Korea, Japan, and Taiwan equities. It recommends an overweight position in the area of developed market government bonds, including long-dated Treasuries and the dollar.
What is Goldman Sach Group’s Prediction?
The earnings per share related to S&P 500 are expected to drop by 16% in the current year, per strategists by Andrew Sheets. This is one of the bearish predictions amongst those tracked by Bloomberg. It also contrasts sharply with the bullish predictions from Goldman Sachs Group, as they are anticipating mild growth.
What does Morgan Stanley have to Say?
According to a Morgan Stanley analyst, the downside risk related to US earnings is present. With plunging liquidity backdrop looms, the downward pressure will likely be on the equity valuations in the coming three months. There are chances of witnessing EPS disappointment before the revenue growth slows down. And there is a further contraction in margins.
Bloomberg News reports that Morgan Stanley anticipates that the S&P 500 earnings for every share will come to USD185 compared to the median USD206 prediction.
Team members of Sheet see the gauge to be at 3,900 towards the end of the year versus Friday’s close recorded at 4,282.37. The benchmark is on a bull market edge after a 19.7% rally from a low in October. Hence it gains amidst enthusiasm for the stocks related to artificial intelligence despite a hike in rates from the Federal Reserve and worries of a probable recession.
Several strategists of banks have offered recommendations. It includes developed market investment-grade bonds and defensive stocks. For those looking for yield, there are tier-one securities. These are subordinated bank debts that are over high-yield bonds.
