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#1 12-06-2019 18:26:00

johnedward
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USD: Fed rate rate cut might not be enough to save the markets (MS)

USD: Fed rate rate cut might not be enough to prevent the markets from sinking (Morgan Stanley)


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In an analysis published on Tuesday, Lisa Shalet of Morgan Stanley Wealth Management still expects the S&P 500 Index to move within a range throughout the year, even if Federal Reserve rates fall.

"Powell marked a turning point in Fed policy at the beginning of the year, putting his plans to raise rates on hold. Now, as the U.S. economy continues to weaken, Fed officials have indicated that they are prepared to cut rates if necessary. Investors are therefore expecting rate cuts as early as this summer, which has triggered a recovery in equities."

"I am not convinced that optimism will last. While lower interest rates are expected to help stimulate economic growth, they will not affect some issues that could lead to investor fear and asset volatility."

Indeed, we can identify at least 3 risks that will not improve with a Fed rate cut:

Arrow Trade disputes will not disappear
Arrow The risk of a hard Brexit remains high
Arrow Anti-trust procedures could undermine the technology giants

As a result, the bank suggests that investors remain cautious.

"This may be a good time to create watch lists of companies in sectors such as finance, energy, materials and some health and industrial sectors that could provide interesting buying opportunities if downward pressure resumes."


"Anything worth having is worth going for - all the way." - J.R. Ewing

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