Massively Overvalued Dow Jones Will Bust, Morgan Stanley Says in Trade Data Shocker, Crypto Coins News
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Morgan Stanley says phase one deal unlikely to improve business confidence.
The Dow Jones may have overreacted as economists like Paul Krugman says U.S. really lost the trade war.
Even if a bigger deal happens, long-run costs could prevent an extended stock market run.
The Dow Jones Industrial Average (DJIA) is hovering at record highs following the agreement of a phase one deal. But, Morgan Stanley says that it is not enough to improve business confidence.
Nobel laureate Paul Krugman and FTSE Russell executive Alec Young among many others similarly believe that the phase one agreement in its current form isnot enough to sustain the Dow rally.
The only reason why themarkets responded with extreme euphoriain the past week is because expectations dipped in the last quarter as the US and China had a fallout.
As the Dow Jones and the global market stabilized, strategists started to re-evaluate the phase one deal. And upon re-examination,strategists have become less optimisticon the potential effect of the agreement.
Given the execution risks going forward and the lack of clarity on important details, we don’t yet have the conviction that this deal can be a catalyst to a meaningful uptick in business confidence.
The impact of the deal on business sentiment and productivity is crucial because that has been played out to the public as the deal’s most coveted benefit.
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