A summary of comments from MS on equities:
- Correction is overdue
- but ultimately should be a pause
- We still recommend adding more cyclical risk to portfolios in this pullback.
- Dividends matter more than earnings and risk is greater at the stock level.
- We believe this correction could be a meaningful (10%) but necessary pause that refreshes.
- Our bullish view has not changed, nor has the narrative - a severe recession acknowledged by all, the bottoming rate of change in economic data/earnings revisions, seemingly unlimited central bank support, unprecedented fiscal stimulus that we believe is likely to become structural in nature and that leads to rising inflation expectations sooner than the consensus expects.
