Morgan Stanley's Chief Equity Strategist, Michael Wilson says:
Winter is here...Investor attention should now turn away from the Fed and to the Ice part of our narrative – slowing growth. As we’ve been writing for months, we think the current deceleration in growth is more about the natural ebbing of the cycle than the latest variant of Covid. Among other things, we have been monitoring PMIs and earnings revisions breadth for signs the slowdown is bottoming, but it has quite a bit further to go, in our view, and equity markets are not yet priced for it.
Defense wins championships...Offense fills the stadium but defense wins championships. Secular growth stocks or high beta cyclicals are what most want to own, but there are times when playing defense makes sense. This is one of those times. While Defensives and Cyclicals have trounced Secular Growth over the past few months, we think the fatter pitch now is to be long Defensives relative to Cyclicals with the Ice part of our narrative really kicking in.
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