Morgan Stanley mener, at en ny amerikansk stimulipakke er blevet mere sandsynlig, og det forøger risikoen for højere lange renter. Det kan bremse high-tech aktierne, men det vil gavne de sektorer og aktier, der har været undervurderet under coronakrisen, kort og godt de “almindelige” aktier. Efter de seneste kursfald på S&P500 har aktierne fået en fair værdi. Morgan Stanley venter et niveau på 3100-3550 for resten af året.
Rate Scare on Deck?
With a U.S. fiscal stimulus deal looking more likely, the risk of long-term interest rates moving higher has now increased—a shift that could benefit recovery stocks.
Late in August, we called for a growth scare to be followed by a rate scare. That narrative was supported by our view that Congress appeared to be entering a period of gridlock with respect to the next round of stimulus, just as the inevitable second wave of COVID-19 was approaching.
Fast forward to today, and the first leg of that narrative seems to have played out with the S&P 500 falling close to 11% from its high, led by the Nasdaq’s 14% decline.
In addition to congressional gridlock and the threat of a second wave of the virus, the nation has also experienced a heightened level of social unrest and rising uncertainty about the election and the timing of a definitive outcome.
Collectively, these headwinds present a risk to both the pace and sustainability of the recovery. In short, a growth scare.
As October began, the growth scare has continued to dominate our discussions with clients led by whether Congress will pass the CARES 2 fiscal stimulus bill before the election or not. That question gained further attention after the President and several Republican senators tested positive for COVID-19 last week.
Intermediate term, our view on the recovery remains decidedly positive. The V-shaped recovery we expected is playing out in the data and markets.
We think the market is much more realistically priced at this point and would describe the S&P 500 close to “fair value” at current prices and right in the middle of the 3100-3550 range we expect the index to trade for the rest of the year.
At this point, the market most mispriced for the ongoing recovery we expect is the back end of the Treasury curve, or long term interest rates.
This means expensive growth stocks are still vulnerable in our view. In many ways, the Nasdaq has been treated as its own asset class the past few years due to its better long term growth prospects and its perceived defensiveness during this pandemic.
These characteristics make the index much more sensitive to changes in long-term interest rates. With a fiscal deal still looking likely, in our view, either before or after the election and the growth scare now somewhat priced, the risk for rates to move higher is greater.
By definition, that increases the risk of a move lower in those assets most tied to long-term interest rates.
Such a risk is underappreciated. In other words, the second part of our narrative, the rate scare, may be ready to play out.
In addition to the obvious catalysts of a fiscal deal getting passed sooner than what is currently expected, we also now have the election uncertainty holding back the move we expect.
At that point, we think the rates market will quickly discount what the stock market and other asset markets have been saying all year, that the recovery is on solid footing and is likely to continue in 2021.
The next round of fiscal stimulus is coming our way one way or another, and it’s just a matter of size and timing. This also aligns with our recommendation to focus on the recovery stocks, even during this growth scare, as that is where the upside is greatest.
A move higher in rates should only further support that view, as most recovery stocks are positively correlated to such a move, led by financials, consumer cyclicals, materials, and industrials with a smaller capitalization skew.