JPM Chase Says Stock Market Bottom Is In-Goldman Sachs Says the Stock Market Crash Isn’t Over. Strategists at JPMorgan Chase & Co. have concluded that most risk assets a universe that typically includes stocks and credit — have seen their low points for the recession that’s gripped economies around the world.
Conditions that JPMorgan had set for market stabilization and revival have largely been met, with recession-like pricing, a reversal in investor positioning and extraordinary fiscal stimulus, strategists led by John Normand wrote in a note Friday. Coronavirus infection rates remain a “wild card,” as they’re still high.
Most risk assets should trade higher in the second quarter of the year, Normand said. He recommends that investors average into oversold markets, particularly those where central banks are buying directly. (Averaging into markets entails spreading out the purchases over time rather than diving in in one go.)
Goldman Sachs Group Inc.’s David Kostin reiterated in a note Friday that he expects the market to turn lower in coming weeks. He cited a checklist for a sustained rally similar to Normand’s of slowing viral spread, evidence that fiscal and monetary policy stimulus is working, and a bottoming in investor positioning and flows.
Morgan Stanley Forecasts Economic Recession Until 2021. Morgan Stanley warned investors on that the worlds economy is headed for a global recession.
“Global recession in 2020 is now our base case,” Morgan Stanley chief economist Chetan Ahya wrote in a note. “In Europe, USA, and Asia, the disruptions and dislocations in the economy and markets will trigger a [year over year] contraction in global growth in [the first half of 2020].”
Morgan Stanley believes the U.S. government is undertaking a “strong monetary and fiscal policy response” that “will help revive global growth” in the third quarter of this year. But, overall, Ahya said global economic growth will slow to 0.9% this year, “the lowest since the global financial crisis.” The firm’s base case for global growth is -0.3% in the first quarter, -0.6% in the second quarter, 1.8% in the third quarter and 2.5% in fourth quarter.
“This time will be worse than the global recession of 2001. While the policy response will provide downside protection, the underlying damage from both Covid-19′s impact and tighter financial conditions will deliver a material shock to the global economy,” Ahya said.
Morgan Stanley’s new base case implies a $360 billion loss to nominal U.S. gross domestic product (GDP).
The firm expects U.S. quarterly GDP to slow and not recover until the first half of 2021. Specifically, Morgan Stanley estimates the U.S. economy will see 1.8% growth in the first quarter of 2020, 0.3% in the second quarter, 0.2% in the third quarter and 0.2% in the fourth quarter.
Stock Market Crash 2020. Stock Market Crash News. Stock Market Crash analysis. Why is the stock market crashing. 10 Reasons the stock market could crash. Stock Market Collapse.