Morgan Stanley points to economic leading indicators and hides
Posted on 09 February 2010
Seems like Morgan Stanley’s European Equity Strategy team is worried that all the good news has both happened… and is priced in. See the Business Insider’s summary “Morgan Stanley: Here’s Two Economic Indicators Flashing A Huge SELL Signal“.
As we looked at back in October – economic leading indicators can be useful in gauging the future direction of the equity markets. With the OECD’s CLI for the OECD plus six continuing it’s slow rollover (per yesterday’s post)- and at 34 year highs in absolute terms – would appear that the odds that the economic recovery will stall from here are pretty high.
With the recovery likely to have peaked – the only way is down for aggregate earnings (barring another round of cost cutting and inventory adjustment). Equity prices would seem to be anticipating this…
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