Economics
Morgan Stanley Says Market Overpricing Goldilocks Scenario
- Investors are also too dismissive of the ‘tails’, Sheets says
- Strategists see market reversals such as cyclical dollar peak
Monitors display the U.S. Dollar and China Renminbi exchange rate outside Morgan Stanley headquarters in New York.
Photographer: Michael Nagle/BloombergThis article is for subscribers only.
It’s possible that global economic growth will stabilize while inflationary pressure remains absent and the top central banks stay on hold for the next 24 months. But that scenario is being overpriced by the markets, according to Morgan Stanley.
At the same time, investors are too dismissive of the “tails,” in which global growth rebounds more strongly amid China’s stimulus, or the first quarter’s notable earnings weakness had a bigger market impact, according to strategists led by Andrew Sheets.