Morgan Stanley has been the most bearish of the Wall Street houses for a while and it’s shaping up:
Our process tells us the risk-reward remains unattractive at the index level given slowing growth and rising rates. Meanwhile, price action can be interpreted bullishly or bearishly. With 3Q earnings season likely to bring a much more muted outcome, we remain defensive in our positioning. Process and price tell us the risk-reward remains unfavorable at the index level. As growth decelerates and financial conditions tighten, valuations are likely to fall from their lofty levels. As for price, it looks like the uptrend was broken last week. Trust the fundamental and cycle analyses which suggest lower index prices ahead. Stick with a barbell of defensives and Financials.
And:
