Morgan Stanley Strategists Reflect Optimism Regarding the Economic Recovery

FXOpen

The coronavirus pandemic enters its fourth month, and the Western world is divided regarding how the economic recovery will take place. Many voices call for a V-shape recovery, while others are tempered by the mixed economic data coming out each week.

However, there is one optimistic view regarding the recovery, as Morgan Stanley economists expect a much faster recovery when compared with the Great Financial Crisis (GFC).

Morgan Stanley Strategists Reflect Optimism Regarding the Economic Recovery

V-Shaped Economic Recovery According to Morgan Stanley

The economic business cycle is the one thing every economic forecaster tries to master. If traders correctly identify where an economy is on the business cycle, he/she can easily calibrate the portfolio so as to make the most of the opportunities ahead.

So far, the data since 2020 offered little incentive to cheer. Rising unemployment, increasing debt levels – not something to celebrate nor to be bullish about.

Yet, there is one company betting on a faster recovery than the data suggests. Morgan Stanley’s recent economic outlook points out that a new cycle may have started and that we deal with a sharper but shorter recession.

Let us not be delusional – the forecast does not refer to the next month or so. Instead, it refers to 2021, when a full 6.1% growth is expected globally, after a contraction in 2020 of -3.8%.

Morgan Stanley believes that consumers will adjust to the new normal much faster than anticipated. But the recovery does not depend only on the economic data – it also must consider the US election outcome.

The US-China trade tensions moved financial markets in the last couple of years before the coronavirus crisis, and the run-up to election day may very well be about the same theme. Market volatility is likely to increase and Range trading to extend throughout the summer.

Optimism is the name of the game if judging by the Morgan Stanley’s 2020 midyear economic outlook. Are we in for a sharp recovery, or is it just unjustified optimism?

Time will tell.

This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

Latest from Financial Market News

Weekly Market Wrap With Gary Thomson: NASDAQ’S NEW TOP, USD/CAD NEWS, WTI OIL, NVDA SHARES DECLINE Federal Reserve's 2024 Interest Rate Outlook: A Measured Descent Expected Weekly Market Wrap With Gary Thomson: EUR/GBP’s NEW HIGH, US INFLATION, S&P500 FORECAST, BRENT CRUDE Sterling Makes Modest Gains Following Cabinet Reshuffle by PM Rishi Sunak Bank of England Initiates Stress Test In Aftermath of Liz Truss Budget Disaster

Latest articles

Forex Analysis

European Currencies at Strategic Levels

The downward trend in the US currency continues to gain momentum. Thus, the euro/dollar pair yesterday tested important resistance at 1.1000, the pound/dollar pair strengthened to 1.2700, and the usd/cad pair fell below 1.3600.

Indices

Market Analysis: Stock Market Reaction to US GDP News

According to data released yesterday, the US economy is growing at a stronger pace than expected. Thus, US GDP in the 3rd quarter increased by 5.3% in annual terms (an increase of 4.9% was expected). Combined with softening

Cryptocurrencies

BTC/USD Analysis: New High for the Year Shows Bulls Are Indecisive

During November, the price of bitcoin increased by approximately 10% in anticipation of the launch of a bitcoin ETF. But the positive sentiment of crypto investors is seriously overshadowed by news regarding Binance: → Changpeng Zhao resigned as head of Binance.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 60% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.