Investors should brace for market turmoil over the next 12 months, this Morgan Stanley team says
That’s the warning from Morgan Stanley’s cross-assets team, who says their cyclical indicator has flipped to “downturn” from “expansion,” a shift that has historically led to weaker returns for stocks and other risky assets, along with an elevated chance of a recession. In a note dated on Sunday, the bank advised market participants to go on the defensive, eschewing U.S. stocks for the safety of Treasurys and cash.“With U.S.
Still, investors still have some time before they start to undergo serious pain as lower returns come mostly at the back-end of the 12-month period following the entry into the ‘downturn’ phase. Stocks and credit markets have already come under pressure as President Donald Trump’s threat to escalate its trade spat against China in May renewed fears that a tariff battle could dent the global economy’s momentum at a vulnerable time. Trump’s tariff threat against Mexico last week, and reports that the administration had contemplated slapping import levies on Australia have jolted investors.
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