Morgan Stanley experts are abandoning US stocks in favor of European and Japanese stocks. (© Fotolia)
The strategists of the American bank advise to reduce the exposure of portfolios to American equities, but to privilege the European stock markets and the cash.
Morgan Stanley strategists anticipate a more chaotic market phase in September and October.
According to them, the economic cycle remains in expansion but the current month and the following one pose a significant risk of slippage linked to the policy of the central banks and to the legislative agenda.
The bank’s experts therefore reduced their exposure to US equities, preferring European and Japanese equities. Their overall sentiment on equities is also becoming more cautious, from “overweighting” to “neutral”.
They are negative on government bonds and increase liquidity in portfolios. They think investors are underestimating the strength of economic activity.
Tensions to be expected on long rates
If the cases of Covid start to decline and if the infrastructure program is passed in the United States, then interest rates should adjust upwards. This is in reaction to the inflation of costs and wages.
Conversely, if the economy slows, many risk premiums appear too low compared to their levels before the health crisis, when investors were already worried about slower growth.
The high valuation of growth stocks, US equities and private debt makes them more vulnerable to a
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