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Add Morgan Stanley to the list - they've raised recession odds for 2022/2023
Posted on 5/19/22 at 10:11 am
Posted on 5/19/22 at 10:11 am
Morgan Stanley is joining Goldman and others in their belief that a hard, rather than soft landing is becoming more likely.
They've been wrong before, but I'm more inclined to believe them this time. The question is how best to prepare for an opportunity to buy in the future? Or to prepare for possible layoffs?
quote:
Morgan Stanley raises recession odds for the next year as inflation surges
Economic growth in the U.S. is already slowing
FoxBusiness
The risk of a recession in the U.S. is growing rapidly, according to Morgan Stanley economists, as stubbornly high inflation threatens to weigh on economic activity.
In a Monday analyst note, the bank strategists lifted their forecast of a recession in the next 12 months to 27%, a stark increase from March, when they projected just a 5% chance of a downturn this year. The increased probability of a downturn comes amid concerns that the Federal Reserve will be unable to achieve the elusive "soft landing," the sweet spot between curbing consumer demand and cooling inflation without crushing economic growth, as it raises interest rates.
"The probability of a hard rather than soft landing in the next 12 months has jumped to 27%," Lisa Shalett, Morgan Stanley Wealth Management's chief investment officer, wrote in the note.
quote:
Economic growth in the U.S. is already slowing. The Bureau of Labor Statistics reported earlier this month that gross domestic product unexpectedly shrank in the first quarter of the year, marking the worst performance since the spring of 2020, when the economy was still deep in the throes of the COVID-induced recession.
The analysis comes amid growing fears on Wall Street that the Fed may drag the economy into a recession as it seeks to tame inflation, which remained elevated at 8.3% in April. Bank of America, as well as Fannie Mae and Deutsche Bank, are among the Wall Street firms forecasting a downturn in the next two years, along with former Fed Chairman Ben Bernanke.
They've been wrong before, but I'm more inclined to believe them this time. The question is how best to prepare for an opportunity to buy in the future? Or to prepare for possible layoffs?
This post was edited on 5/19/22 at 10:12 am
Posted on 5/19/22 at 10:13 am to goofball
The odds seemingly increase everyday.
Posted on 5/19/22 at 10:15 am to goofball
quote:
In a Monday analyst note, the bank strategists lifted their forecast of a recession in the next 12 months to 27%, a stark increase from March, when they projected just a 5% chance of a downturn this year.
Gotta put things in context. Most of these big firms are still standing by the call of no recession this year. Higher likelihood but not occurring.
The Q2 GDP print will be super interesting.
Who’s got it right? Main St or Wall St.
Posted on 5/19/22 at 10:27 am to LSUcam7
quote:
The Q2 GDP print will be super interesting.
Who’s got it right? Main St or Wall St.
IDK.
But I am not confident in Powell's "engineered soft landing". Mr. "transitory" has been catastrophically wrong very recently on inflation. I don't trust the Fed's ability to not frick this up.
Posted on 5/19/22 at 10:33 am to goofball
quote:
don't trust the Fed's ability to not frick this up.
You shouldn’t trust it. They’ve proven time and time again that they can’t.
But I’d argue they’ve already messed it up. Now, they are doing damage control. Or at least, making it appear as if they are doing damage control.
But the facts are.. money is still loose, albeit less loose. Money supply growth has started to peak, but still a big number.
Recession is inevitable, it always is, and part of the business cycle. The debate right now is when?
Main St says we’re in it, Wall St says we have +12-18 mos, generally speaking.
ETA: to the second point… the government combined with the Fed has fricked it up. Shutting down the economy for COVID and injecting trillions in the system (I.e. stimmy’s) will go down in the history books as a massive policy misstep.
Not only for business rationales, but it looks like the states that shut down didn’t manage COVID ANY better, from a health perspective, than states that stayed open. The misstep started with the knee-jerk reactions by our governments and the subsequent reaction to pay people to sit at home.
This post was edited on 5/19/22 at 10:42 am
Posted on 5/19/22 at 10:42 am to goofball
What are you talking about? If you read the posts on this board we are already in the midst of the 2nd great depression!
Posted on 5/19/22 at 6:46 pm to goofball
I'd love to see the formula that comes out with a specific number like 27% for a recession.
This post was edited on 5/19/22 at 6:46 pm
Posted on 5/19/22 at 6:58 pm to goofball
It’s also a different 12 months. A 5% chance of a reaction through March 2023 and a 27% chance of a recession through May of 2024 are different things.
Also, for perspective, there is about a 17% chance of a recession occurring in any 12 month period since 1928.
Also, for perspective, there is about a 17% chance of a recession occurring in any 12 month period since 1928.
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