Is the tide about to turn?

Schroders Investment Management yesterday released a report entitled ‘The case for US equities’. In the report, they said that stocks will be in favour again in Wall Street and that the US economy could recover soon. ‘As of May, most indicators for the US economy reflect a weak situation. Interestingly, the tone of discussion has shifted from ‘recession’ to ‘recession or near-recession’. Commentators no longer state it as a given that the US is in or is entering into a recession,’ said Schroders.

It added that the best which can be said for now is that the US is not in as bad a shape as most had expected, that valuations are not expensive, and that contrarian buying is probably close at hand.

Morgan Stanley, in the meantime, in a May 28 Global Economics report looked at the issue of high oil prices, surging inflation, and the possibility of a resultant recession. ‘We expect slower growth, not a global recession. The price hikes transfer income rather than destroy it; subsidies mute the price hike’s impact in a number of economies and central banks aren’t tightening aggressively. But the shock likely will hurt oil consumers, magnifying downside risks to growth.’

From expectations of a sure thing of a global recession, to slower growth. Things are looking up!

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