Morgan Stanley har i en ny analyse over økonomien og markedet fremsat en prognose, der indikerer, at markedet næsten helt genvinder tabet fra toppunktet inden coronakrisen. Prognosen for S&P 500 lyder på 3350 på 12 måneders sigt mod toppunktet på 3400 før krisen – med en bull market prognose på 3700 og en bear market prognose på 2900. Markedet bundede i marts med 2200 og har rettet sig til knap 3100 i dag. Morgan Stanley begrunder sin positive prognose med, at krisen var menneskeskabt (med den omfattende lockdown), og at økonomien derfor hurtigt kan genoprettes. At politikerne og centralbankerne greb massivt ind mod krisen. Og at indgrebene tog sigte på at opretholde forbruget og at sikre de små virksomheder.
The Highs and Lows of New Bull Markets
Today, we published our mid-year outlook for both the economy and markets for the next 12 months. For U.S. equity markets specifically, our June 2021 base case price target for the S&P 500 is now 3350 with a bull and bear case target of 3700 and 2900, respectively.
Much of the increase is simply moving forward in time, assuming the economic and earnings recovery progresses without a relapse, or a double dip.
Our assumption on valuation is for earnings multiples to contract from current levels, which are high because earnings estimates are at the trough of the cycle. We continue to favor a barbell approach for equity portfolios, focusing on reasonably priced, high quality growth stocks paired off with lower quality cyclicals that we think will make it through this very steep, but relatively quick, recession.
That strategy has been working well since the March lows, and we expect it to continue.
The area of the equity market that appears most vulnerable to us are the very defensive bond proxies and profitless growth stocks that are trading at extremely rich valuations. Both are negatively correlated to interest rates, which we believe are set to rise materially over the next six months.
This recession will prove to be the steepest, but also one of the shortest, on record. While the conditions for this recession were already in place coming into 2020, the trigger was unexpected and unusual, which led to unique characteristics.
First, the severity of the recession was manmade due to the decision to lock down the economy. Second, policymakers enacted unprecedented monetary and fiscal stimulus that may prove to be too much in the context of an economy that reopens faster and more durably than expected. Third, the fiscal stimulus is directed right at the consumer and small businesses, which have a greater propensity to spend it in the real economy, which means the velocity of money may not collapse this time as the money supply expands.
This all argues for a weaker U.S. dollar, higher inflation, and nominal GDP. Finally, the excesses of the last cycle were concentrated in the corporate sector, while the consumer came into this recession in much better shape than last time. With housing and equity markets holding up, the average consumer net worth is unchanged, which means we aren’t expecting a big deleveraging cycle this time.
To the contrary, it appears the consumer wants to get back to normal fast, which means 70% of the economy is able to recover quickly.
