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☆ A chief economist who called the 2008 housing crisis says home prices are set to drop another 15% as falling mortgage rates and a recession will create a supply-demand imbalance
▼ + stars: | 2023-05-09 | by ( William Edwards | ) www.businessinsider.com time to read: +5 min

This will drag 30-year mortgage rates — which track closely with 10-year Treasury rates because they typically have a lifespan of around 12 years — down to 6% or lower. One might argue that falling mortgage rates would also stimulate demand enough to meet the rise in supply, holding prices relatively steady. Now that's quite striking because mortgage rates are no longer at peak, but mortgage applications are still falling. Tight monetary policy and a pullback in lending will lead to a cooling labor market, he said, and that's bad for housing demand. Below is the National Association of Realtors' Housing Affordability Index, which takes into account incomes, home prices, and mortgage rates.

☆ 'The equity market is poised to struggle in the weeks and months ahead': Comerica Bank's CIO says the S&P 500 is primed for a 15% drop as weak earnings, high valuations, and a hawkish Fed all work aga
▼ + stars: | 2023-04-22 | by ( William Edwards | ) www.businessinsider.com time to read: +6 min

Year-to-date, the S&P 500 is up 8%. Plus, when the Consumer Price Index is between 4-6% like it is now, it usually dictates that the S&P 500 trades at a lower multiple than it is. "For example, at the current S&P 500 P/E of 19, the earnings yield for stocks is 1 divided by 19, or ~5.2%. While he sees 15% downside in the months ahead, he also believes the S&P 500 will return to current levels by the end of 2023. Morgan StanleyWilson has also repeatedly warned of an earnings recession ahead, and recently said that the pullback in lending from banks strengthens his case.

☆ Weak retail sales, manufacturing output data point to slowing US economy
▼ + stars: | 2023-04-14 | by ( Lucia Mutikani | ) www.reuters.com time to read: +7 min

Data for February was revised up to show retail sales falling 0.2% instead of 0.4% as previously reported. Retail sales are mostly goods, which are typically bought on credit, and are not adjusted for inflation. Retail sales and inflationThe decline in retail sales was almost across the board. Sales at food services and drinking places, the only services category in the retail sales report, edged up 0.1%. Excluding automobiles, gasoline, building materials and food services, retail sales slipped 0.3% last month.

☆ Wall Street sees the Fed starting to signal toward a recession ahead
▼ + stars: | 2023-03-23 | by ( Jeff Cox | ) www.cnbc.com time to read: +4 min

The Wall Street consensus after the Federal Open Market Committee meeting concluded Wednesday was equally cautious. "We took the broad signals from this meeting as lifting perceptions of recession risks within the Fed," wrote Matthew Luzzetti, chief U.S. economist at Deutsche Bank. "Powell noted that recent events will certainly not reduce recession risks, even if how much they heighten those risks remains uncertain." The risk from rates Worries remain that more Fed rate hikes will exacerbate banking problems by creating more duration risk. "We expect the FOMC to hike another 25bp in May, bringing the funds rate target range to 5.00-5.25%," wrote Barclays chief U.S. economist Marc Giannoni.

☆ Slower, but still solid US job growth expected in February
▼ + stars: | 2023-03-10 | by ( Lucia Mutikani | ) www.reuters.com time to read: +6 min

The Labor Department's closely watched employment report on Friday is also expected to show wage gains maintaining their upward trend, underscoring a persistently tight jobs market. Estimates for February payrolls growth ranged from as low as 78,000 to as high as 325,000. "This would indicate the anticipated normalization in the labor market is taking longer than expected," said Jan Groen, chief U.S. macro strategist at TD Securities in New York. There's locational and skills mismatches, which basically means the labor market is not functioning efficiently," said Brian Bethune, an economics professor at Boston College. The Fed has to be careful about how they interpret what's going on in the labor market."

☆ Premarket stocks: The Grinch comes for retailers
▼ + stars: | 2022-12-16 | by ( Nicole Goodkind | ) edition.cnn.com time to read: +6 min

What’s happening: US retail sales, which measure the total amount of money that stores make from selling goods to customers, fell 0.6% in November, the weakest performance in nearly a year. The Fed factor: November’s report could indicate that consumers are feeling the double-punch of sky-high inflation and painful interest rate hikes from the central bank. This retail sales data adds to recessionary concerns, as it suggests that consumers may be becoming more cautious with their spending. Those increases were spurred by the Federal Reserve’s unprecedented campaign of harsh interest rate hikes to tame soaring inflation. The Fed announced on Wednesday that it will continue to raise interest rates — albeit by a smaller amount than it has been.

But since mid-May, when rates futures markets began to bet outright that the Fed would cut rates in the second half of next year, markets have stabilized. Rates futures have raised the 2023 implied fed funds terminal rate by 400 bps to around 5% and the Fed has raised its 'dot plot' forecasts, in a broadly lockstep move. But since mid-May the implied 2023 terminal rate has been brought forward to the first half of the year, and rate cuts have been priced into the second half. Yet policymakers' 2023 economic growth forecast has slumped to 0.5% - it was 2.25% in March - and they now see unemployment topping 4.5%. Powell's comments are pushing Wall Street lower on Thursday, but interest rate markets largely have dismissed them and continue to price in more than 50 bps of rate cuts next year.

☆ Morgan Stanley expects U.S. rent prices to gradually decrease next year
▼ + stars: | 2022-11-17 | by ( ) www.cnbc.com time to read: 1 min

Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailMorgan Stanley expects U.S. rent prices to gradually decrease next yearEllen Zentner, chief U.S. economist at Morgan Stanley, discusses the bank's 2023 outlook for the U.S. property market.

☆ The two words investors want to hear from Wednesday's Federal Reserve meeting
▼ + stars: | 2022-11-02 | by ( Jeff Cox | ) www.cnbc.com time to read: +6 min

As markets look for signs that the Federal Reserve is stepping away from its breakneck pace of interest rate hikes, two words from this week's meeting could be crucial. No one is expecting the Fed to stop rate hikes, at least for several months. "The November FOMC meeting is not about the November policy rate decision. Instead, the meeting is about future policy rate guidance and what to expect in December and beyond." Even with the step-down hopes from Wednesday's meeting, market expectations are still for a fairly aggressive Fed.

☆ MORGAN STANLEY: Buy these 9 stocks now because they'll be among the only winners as the market struggles with the combination of falling demand and growing supply
▼ + stars: | 2022-10-12 | by ( Marley Jay | ) www.businessinsider.com time to read: +3 min

Morgan Stanley says many companies are solving their supply chain woes and building inventory. The good news is the supply chain messes of the post-pandemic world are finally clearing up. "Increasing supply and falling demand is likely to spark discounting, adding fuel to the earnings slowdown we are calling for." Morgan Stanley says consumers are getting pessimistic, with more of them worried their finances will be worse in a year instead of better. Several are from industrial sectors, which Morgan Stanley says are relatively protected from further supply chain problems.

☆ Retailers are gearing up for 'aggressive discounting' on electronics, cars, and more as they've stockpiled the most stuff to sell in 30 years, Morgan Stanley says
▼ + stars: | 2022-10-11 | by ( Ben Winck | ) www.businessinsider.com time to read: +4 min

With demand cooling off and supply still growing, companies are looking to discount, Morgan Stanley said. That powered prices higher at the fastest pace since the 1980s. Supply chain snags are clearing at the same time that demand is slowing, Morgan Stanley economists led by Ellen Zentner said in a Monday note to clients. As such, firms are set to slash prices through the last months of 2022 and into early 2023, Morgan Stanley said. Businesses enjoyed once-in-a-generation pricing power through the pandemic recovery as extraordinary demand and supply-chain bottlenecks dragged inventories to extreme lows.

☆ An ex-Morgan Stanley employee has been repping staffers with bias claims against the bank. In a new suit, a top exec is accused of 'racist rants.'
▼ + stars: | 2022-09-27 | by ( Danielle Walker | ) www.businessinsider.com time to read: +8 min

Blackburn Law, PLLC. "Essentially, Morgan Stanley gave me the seed money to start my practice," Blackburn said of his resolved legal dispute with the bank. A Morgan Stanley spokesman declined to comment on Blackburn's employment at the firm. Hornbach allegedly tasked von der Schmidt with producing the research publication in December 2019, months into his employment at Morgan Stanley. He said it was experiences at Morgan Stanley that put him on the path to being a litigator.

☆ 'Bring the pain': Major banks raise forecasts for rate hikes after Fed's stern actions
▼ + stars: | 2022-09-22 | by ( Jeff Cox | ) www.cnbc.com time to read: +6 min

Goldman Sachs The call : A 75 basis point move in November, 50 basis points in December and 25 basis points in February, for a peak of 4.5%-4.75%, up half a percentage point from the previous expectation. Citigroup The call : November to see 75 basis points, followed by 50 in December and 25 in February, adding a cumulative 25 basis points for a terminal rate of 4.5%-4.75%. Both calls were 25 basis points higher than previous. One more 25 basis point hike in February, followed by a 50 basis point cut "in the latter portion of the year." UBS The call : 75 basis points in November, another 50 in December, with three 25 basis point cuts later in 2023.

☆ With inflation still high, the Fed may be a long way from where it can stop hiking
▼ + stars: | 2022-09-19 | by ( Jeff Cox | ) www.cnbc.com time to read: +4 min

Current market pricing in fed funds futures indicates that the Fed's "terminal rate," or the point where it stops hiking, will hit 4.39% in April 2023. In fact, those expectations for higher rates are causing Wall Street economists to rethink their projections for growth. Goldman Sachs also has raised its expectations for rate hikes this year, though it still sees a terminal rate in the 4%-4.25% range. "Thus far, higher rates have inflicted little widespread pain on the real economy, so the Fed has room to continue hiking into restrictive territory," the Morgan Stanley economist said. "Bottom line is that the Fed needs more evidence that its actions are taking a bite out of the real economy."

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