Morgan Stanley Expects a Shock 16% US Profit Drop to Kill Rally
- Strategists see S&P 500 ending year 9% lower than Friday close
- Greater upside in Asian equities; dollar appeals for defense
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Morgan Stanley strategists anticipate a sudden pullback in corporate earnings will slam the brakes on a US equity rally, a call at odds with Wall Street estimates.
Instead, they are bullish on equities in Japan, Taiwan and South Korea and recommend an overweight position in developed-market government bonds, including long-dated Treasuries, and the dollar.