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Morgan Stanley Calls Time On The Crash

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All five of the bank's key timing indicators are flashing a green light for the first time since early 2009, suggesting the worst may be over for global equities

:lol::lol::lol::lol::lol::lol:

Equities have shot up for 4 years now...if that's the worst then I'd love to see the best.

Where the FTSE is headed:

FTSE.jpg
Edited by TheCountOfNowhere

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From what I've been reading the 'smart' money has been selling since the tops earlier this year. It looks like Morgan Stanley are just trying to pull in more mugs to bail themselves and their 'smart' money pals out.

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From what I've been reading the 'smart' money has been selling since the tops earlier this year. It looks like Morgan Stanley are just trying to pull in more mugs to bail themselves and their 'smart' money pals out.

The obvious question: If their stock timing model is a good as advertised, why didn't Morgan Stanley issue a 'crash' call last year similar to the one they made in 2007?

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They are using bonds as their measure of value. Under normal circumstances bonds should have a yield premium, but this has become inverted towards equities..the current 2.4% excess on equities is close to, if not, at an historic record.

Guess the bond market is betting on deflation. If not may be we get a rout on bonds or both.

Edited by crashmonitor

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The obvious question: If their stock timing model is a good as advertised, why didn't Morgan Stanley issue a 'crash' call last year similar to the one they made in 2007?

Because 'This time it's different' :)

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Before you all write this announcement off as a scam to sell dodgy equities......ask yourself if we have seen the last of QE and central bank activity.

And what happens if they go completely overboard with positive, as opposed to ZIRP, interest rates. That is crazy enough for them to do if they are serious about doing "whatever it takes"

..._

Edited by DiggerUK

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The obvious question: If their stock timing model is a good as advertised, why didn't Morgan Stanley issue a 'crash' call last year similar to the one they made in 2007?

One of their chaps opted for 2275 on the S and P by the year end (currently down to 1913). So we need a 19% lift pretty quickly, I guess that's in line with their V shaped turbo recovery.

http://uk.businessinsider.com/wall-street-2015-sp-500-forecasts-2015-1?r=US&IR=T

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Graham Secker, the bank’s chief European equity strategist, said the sell-off over recent weeks is largely driven by emotion and has little to do with the underlying outlook for the world economy.

This chap and I are on very different planets.

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Before you all write this announcement off as a scam to sell dodgy equities......ask yourself if we have seen the last of QE and central bank activity.

And what happens if they go completely overboard with positive, as opposed to ZIRP, interest rates. That is crazy enough for them to do if they are serious about doing "whatever it takes"

..._

1. Market couldn't care less in 2008/2009 for the QE until it was done selling. For quite a few months, ok?

2. Whatever it takes - including total destruction of the currency systems involved? This will not be done by the CBs, but when the governments get so pi55ed off that they take over money supply from CBs. That's when things may get crazy enough.

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Announcements may be influenced by the advice you are giving to clients. As to whether they hold any of this on their books I really wouldn't like to speculate. I note Lehmans played the market in 2003 and survived by doubling up as the market plunged and made big profits on the rally thereafter. Of course they then got caught with their trousers down with toxic waste they loaded up on even as the housing market was tanking.

At the height of the crash a week last Tuesday the BBC had some investment banker wheeled out that expected the 5768 on the FTSE 100 was just the start, he also admitted that he had advised his clients to go short. So nobody gives an unbiased commentary.

Edited by crashmonitor

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He said the current mood has echoes of 1998 during the East Asia crisis and the Russian default, when there was a nasty squall in the markets but it proved to be a false alarm for the global economy, thanks to three back-to-back rate cuts by the Fed

And can we expect three back-to-back rate cuts from the Fed this time? No, because rates are already at zero and in theory are going to go up (although in practice they aren't going anywhere).

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And can we expect three back-to-back rate cuts from the Fed this time? No, because rates are already at zero and in theory are going to go up (although in practice they aren't going anywhere).

I have referred back to the Russian crisis of august 1998 quite a few times. Those that are bullish on equities now are relying on valuation comparisons as opposed to absolutes. Yields aside we entered that crisis not far off today's equity valuations even though we are 17 years on. That's nominal not real. indeed MP are using bond valuations to trigger their 5 green lights.

So we seek safety then in stuff that has gone up 300% (gold) 200% bonds (barring yield) 200% property (barring yield).

I guess the real safe bet at the moment looks like cash.

Edited by crashmonitor

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Before you all write this announcement off as a scam to sell dodgy equities......ask yourself if we have seen the last of QE and central bank activity.

And what happens if they go completely overboard with positive, as opposed to ZIRP, interest rates. That is crazy enough for them to do if they are serious about doing "whatever it takes"

..._

The only hope against that eventuality is physical gold.

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One of their chaps opted for 2275 on the S and P by the year end (currently down to 1913). So we need a 19% lift pretty quickly, I guess that's in line with their V shaped turbo recovery.

http://uk.businessinsider.com/wall-street-2015-sp-500-forecasts-2015-1?r=US&IR=T

This douchebag, Adam Parker.

Two months ago he said he didn't see a major market correction coming any time soon and was loathe to call a top when he didn't see one forming. <_<

adam-parker-2.jpg

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Whatever happens they're covered as everything negative for them is unexpected and the media ask no difficult questions - then there's the back stop bailouts.

Edited by billybong

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The only hope against that eventuality is physical gold.

Whatever happens they're covered as everything negative for them is unexpected and the media ask no difficult questions - then there's the back stop bailouts.

Gold is a hindrance for the state, having a gold standard in 1914 made it nigh impossible to print money as needed. The war made it necessary to go with fiat.

Don't forget the pound and ten shilling "Bradbury's" issued just before the 1st world war made sure the gold sovereigns didn't disappear from circulation.

This move meant that no bank was forced to close in the 1914 crisis on the eve of the war.......too big to fail is nothing new.

Any bailouts now have no hindrance from a gold standard.....printy, printy, printy, print..........when it ends is indeterminable for now. How it ends, less so.

..._

Edited by DiggerUK

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I guess it's not a full house until Goldman Sachs, Merrill Lynch, J P Morgan and Deutscher sign up, but I guess they can arrange something.

Squid already on board.

MS are spot on. Unless it is different this time which it "probably" isnt ("balance of probabilities" in article)

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This douchebag, Adam Parker.

Two months ago he said he didn't see a major market correction coming any time soon and was loathe to call a top when he didn't see one forming. <_<

Link?

Its not a bull market top is it. So why call one?

Are you calling May the bull market top?

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Link?

Its not a bull market top is it. So why call one?

Are you calling May the bull market top?

Info came from a link in the Telegraph comments section, sorry. Looked genuine to me.

Yup. May sure looks like the top from here. Took over a year to complete (held up indirectly by QE from the BoJ and ECB) but once China started to fall apart it was game over. Seven years of central bankers papering over live termites to quote Rick Santelli. And if/when the Fed puts up rates, look out below!

Edited by zugzwang

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Another Morgan Stanley report, this time on megabank litigation fines/costs. Probably doesn't warrant a separate thread so I'll link to it here.

$260bn down, only $65bn to go!

http://www.valuewalk.com/2015/08/big-banks-260-billion-down-only-65-billion-to-go-says-morgan-stanley/

According to Morgan Stanley (NYSE:MS), the death by 1000 cuts that big banks have been going through for the last few years is not over yet, even after paying $260 billion in fines since 2009. In fact, a recent Morgan Stanley report estimates that global mega-banks (the top 25 largest banks) are still looking at around $65 billion in litigation costs remaining between now and 2017. Moreover, MS projects that European big banks may have as much as one-third of their litigation costs still in front of them.

Huw van Stennis and team end their report with the following investment conclusions: "US major litigation is largely behind us,except for the DoJ litigation on GS and Libor.We expect payout ratios at JPM, BAC and C to rise from an average 33% in 2014 to 67% in 2018e, similar to US Non G-SIFI peers. In Europe, we’re below consensus on divis for CS, BARC, DBK,STAN and HSBC Holdings plc (ADR) (NYSE:HSBC) (LON:HSBA) but ahead for UBS AG (NYSE:UBS)."

Break down of litigation costs at big banks

In the first part of their August 19th report, van Stennis and colleagues take a closer look at the question how far through the litigation process are the big banks? Given that close to $260 billion has already been spent in litigation/settlement, Morgan Stanley is projecting yet another $65 billion in litigation expenses still on the way for the largest 25 U.S./EU banks by the end of 2017.

bank-fines1.jpg

bank-fines2.jpg

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My cynical take on this is there are four stages.

1) See something happen in the world and sell like crazy

2) Get talking heads on TV to worry the public so they start selling

3) buy back shares at a much lower price

4) Tell pubic that everything is OK and to buy back shares at a higher price than they sold them for.

For algorithm trading to work you need others in the market other than algo trades. If everybody just went long forever algo's would be a zero sum game.

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