MS, on the headline, seems to be shifting stance a little towards recessionary risks which would be U turn on their views expressed 10 days or so ago (report published here look for ‘MS rebuff to UBS’).
But on closer reader MS have not changed their view that the US will not slip back into recession. The reasons for not slipping back make interesting reading..
i) the corporate sector looks healthy
ii) household real incomes will be supported by lower headline inflation
iii) we expect more action from central banks,including rate cuts and more non-standard easing fromthe Fed and the ECB
I’m would have thought ii and iii would nicely contradict each other but this is what they believe. Imo iii will occur and this will be the main reason why asset prices shouldn’t decline for long and GDP as measured by governments will be positive.. given governments across the world understate inflation and there fore over state GDP. Its really very straight forward how to keep official GDP positive for a government with rigged statistics and a printing press. I would suppose it would be politically incorrect for Morgan’s to spell it out in quite this way but this is the reality of the situation.
Here the report as provided to their clients today.. inc a rate cut for the euro area & Australia in 2012 (note) and rate rises for Canada and the uk in 2012.. Note rate rises for Sweden in 2011. Their view of course.. higher rates in the uk looks far from certain with Posen leading the charge, yet again, for a fresh wave of qe by the BOE.
MS–Dangerously-Close-to-Recession
Rich
(4 votes, average: 5.00 out of 5)
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