November 17, 2021
Good morning,
The “pause” periods for the equity market are often frustrating to me personally – there just isn’t that much to write about. Futures overnight were steady as fears of inflation and Europe’s fourth virus wave were said to be simmering under the surface (Bloomberg). With little else to write about, the popular press is completely focused on who will be our next Fed Chairperson – Powell or Brainard. The decision is expected this week.
If, for no other reason than the market doesn’t normally favor change (it’s easier to discount steady-state), I suspect a small bump up on the major indexes if Powell remains in place.
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The Outlook 2022 season looks like it began this week – it seems to start earlier and earlier each year, no? Morgan Stanley’s outlook, published this morning, is the most provocative so far. They are calling for year end S&P 500 at 4400 – that’s down -6.4% from last night’s close. Their argument is all centered on multiple contraction (22 to 18) and higher rates (10yr to 2.1%). They did give themselves plenty of cover to be wrong, but it was nice to see a publicly traded financial service company release a strategist’s unvarnished appraisal of the future.
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Be well,
Mike