Wall Street turns bearish

In lieu of my own assessment of the smartest guys in the room this week, here is an alternative from ZeroHedge. In my view, a commodity crash and equity correction are dead ahead as China slows much more than the market is pricing for. Inflation is not the risk, deflation is.

Morgan Stanley

We start with Morgan Stanley, which yesterday published its latest Global Macro Forum slide deck (available for professional subscribers), and where the bank’s chief cross-asset strategist Andrew Sheets warns that equity market internals have continued to follow a “mid cycle transition”, a process which usually ends with quality stocks – like the FAAMGs market “generals” – getting hit, “which poses outsized risk to the high-quality S&P 500” through October.

Sheets frames his pessimistic view by disclosing the five themes which he believes will define markets though year-end. These are:

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