ZH: CEOs discussing Fed policy on Earnings calls soars to record
ZERO HEDGE reports: The July FOMC meeting confirmed Powell and company are inching closer and closer to embarking ...
XPO: BUILDING BLOCKSHLAG: BIG ORDERLINE: REACTIONLINE: EXPENSES AND OPERATING LEVERAGELINE: PIPELINE OF DEALS LINE: DEMAND PATTERNS LINE: LANDSCAPELINE: CONF CALL STARTSDSV: UNTOUCHABLEEXPD: NOT AS BULLISH AS PREVIOUSLYFWRD: SPECULATIVE RALLY MAERSK: INTEGRATED LOGISTICS WIN MAERSK: TRUMP TRADEKNIN: THE SLIDELINE: DEBUT AAPL: ASIA CAPEXDHL: THE HANGOVERXPO: ELECTION DAY RALLY
XPO: BUILDING BLOCKSHLAG: BIG ORDERLINE: REACTIONLINE: EXPENSES AND OPERATING LEVERAGELINE: PIPELINE OF DEALS LINE: DEMAND PATTERNS LINE: LANDSCAPELINE: CONF CALL STARTSDSV: UNTOUCHABLEEXPD: NOT AS BULLISH AS PREVIOUSLYFWRD: SPECULATIVE RALLY MAERSK: INTEGRATED LOGISTICS WIN MAERSK: TRUMP TRADEKNIN: THE SLIDELINE: DEBUT AAPL: ASIA CAPEXDHL: THE HANGOVERXPO: ELECTION DAY RALLY
ZERO HEDGE reports:
(By Vishwanath Tirupattur of Morgan Stanley)
Our 2023 Outlook – What We Debated
This has been our outlook week. We published our year-ahead global economics and strategy outlooks last Sunday, and the more detailed asset class and country-specific outlooks have been streaming out during the week, with more to follow. At Morgan Stanley Research, the outlooks are the culmination of a process involving much deliberation and spirited debate among economists and strategists across all the regions and asset classes we cover. In a highly interconnected world with myriad uncertainties, we are convinced that this collaborative exercise in which we challenge each other’s views is critically important. In last week’s Sunday Start, my colleague Andrew Sheets summarized the outcome of the process – our outlook for 2023 across markets and economies. This week, I will focus on some of the key debates we engaged in during the process.
Unsurprisingly, we spent a lot of time on inflation. Given the many upside surprises to inflation through much of the year, there was understandable skepticism around our forecast that US inflation will show a steady decline. Our economists acknowledged the uncertainty but took some comfort in base effects, normalizing supply chains, and weaker labor markets. They also saw deflation (not just disinflation) in certain core goods such as autos and a reset in medical services prices exerting a steady drag on core inflation. To be clear, our US inflation forecast takes into account that while shelter inflation will slow, it will remain a persistent driver of above-target inflation for a few more quarters.
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Our FX strategists changed their bullish stance on USD to neutral, a notably out-of-consensus call. With our outlook debates taking place against the background of a hawkish-sounding post-FOMC press conference at which the Fed chair signaled the policy rate peaking higher than previously thought, this change was vigorously debated. Our strategists argued that a decline in inflation as our economists forecast would limit upside potential for US rates. Furthermore, monetary policy in the US is now in restrictive territory, implying that we will see more downside surprises in individual data points. Also, the outlook for China, while still challenging, appears to be shifting, with a decent chance that the authorities take steps toward ending the Covid-zero policy. This would help to bring greater balance to the global economy, with less upward pressure on the dollar.
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