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Morgan Stanley: There is a bigger correction than what we saw in February
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Loading...Leaders in the market have missed the winning season. For Morgan Stanley, this is a worrying sign, which means the stock rally is closing.
Although more than 85% of S & P 500 members exceed analysts' forecasts, the types of pro-cyclical companies expected to grow in banner earnings are lagging behind. The stock risks in July are rising at high growth rates. The three-day drop that began on Thursday will worsen, Morgan analysts say. "The sale has just begun and this adjustment will be greater than the one we experienced in February," they add.
Some movements below the surface place the market to a larger drop. One of the most curious events since the beginning of the reporting season is the lagging values of the shares. Typically, strong earnings reports encourage investors to raise more expensive shares, but the market-neutral version of value has declined over the past three weeks.
Source: Bloomberg
Chart: Used with permission of L.P Bloomberg Finance
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