Displaying items by tag: Morgan Stanley

(New York)

Morgan Stanley put out a very direct research report this week. In it, it tells investors which stocks they definitely should not buy. The bank selected 22 “Secularly Challenged Stocks” which it says no one should own right now. Here is a selection: Alcoa, AMC Networks, Abercrombie & Fitch, CenturyLink, Macerich, Cheesecake Factory, H&R Block, Michael’s, and Molson Coors Beverage.

FINSUM: A lot of names one would expect here, but some that are a bit of a surprise. We certainly would not want to own Macerich given the state of commercial retail real estate, but CenturyLink would not seem nearly so dangerous.

(New York)

The stock market is looking rough right now. The trend has been remarkably more bearish over the last couple of weeks than the 35-40% run higher we saw in the previous five weeks. With that in mind, here are some good stocks to ride out the storm: Morgan Stanley, United Rentals, Baxter International, Iqvia Holdings, Boeing, Whirlplool, Twitter, T-Mobile, Western Digital, and Peloton.

FINSUM: We want to take a moment to focus on Peloton, which has been an incredible business. Peloton’s growth since the lockdown has been enormous, and they have a low churn subscription business. Gyms are going to be unappealing for some time, so Peloton looks like a great buy.

(New York)

Ever since the big stock rally of a couple of weeks ago, the predominant mood of Wall Street analysts has been decidedly bearish. Most big research teams have said markets have further to fall before they hit bottom. However, Morgan Stanley has just come out with a contrarian opinion. Commenting that “the worst is behind us”, the bank says it is time for investors to jump back into stocks in a big way. Summarizing their view, the bank said “With the forced liquidation of assets in the past month largely behind us, unprecedented and unbridled monetary and fiscal intervention led by the U.S. and the most attractive valuation we have seen since 2011, we stick to our recent view that the worst is behind us for this cyclical bear market that began two years ago, not last month”.

FINSUM: The worst of the health crisis is still ahead of us, but it could be the case that the worst of the asset selloff is over. Our lingering worry about this is that a mortgage crisis could be brewing as a result of the stop in the flow of money, so we are worried about another sharp downturn in coming months.

(New York)

Morgan Stanley was due to make some big pay changes for advisors starting April 1st. The changes would mean a reduction in compensation for similar production levels. However, in light of the Coronavirus outbreak, the firm has said it is pushing the implementation date for the changes back to October 1st. Directly addressing the firms 15,000+ advisors, the head of field management said “We know that you are facing enormous challenges personally and professionally while at the same time taking great care of your clients in a very difficult environment”.

FINSUM: These changes are tough to begin with, and doing them right now would have been downright draconian (and might have caused some extra departures).

(Washington)

The forecasts for growth have been reverberating through markets. When this whole crisis started, Goldman Sachs initially said there would be a 5% drop in GDP in the second quarter. Oh how delightful that sounds now. Things have escalated considerably since then. Here is a smattering of various Q2 GDP forecasts: Goldman Sachs at 24% decline, Morgan Stanley at 30%, and the St. Louis Fed at a whopping 50% decline.

FINSUM: We think it is safe to assume that the GDP decline in Q2 is going to massive. So much so that the actual figure matters much less than the pace at which the economy bounces back thereafter. Is it going to be a V-shaped recovery, or a U, or the dreaded “L-shaped” recovery?