Morgan Stanley with a note that I largely agree with:
Our discussions with clients are narrowing to two primary topics: Earnings and Inflation. On the former, we hear many saying earnings estimates are still too low. On the latter, the focus has become an obsession. On both fronts, we could beat a moment of (too) Great Expectations.
It’s better to travel that arrive. Markets are discounting machines and often anticipate changing dynamics long before they become obvious. However, eventually such changes do become obvious and priced, at which point are set is required or evidence the higher expectations are not only achievable, but beatable. Our V-shaped recovery call is now the consensus and bottom-up 2022EPS estimates are now ahead of our top forecasts for the first time since the recovery began.
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David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
