Morgan Stanley strategist: Market dip from downgrade is a buying opportunity

The best strategy for the stock market in Morgan Stanley said that any decrease in the stock market is linked to a reduction in the US -Moody credit rating that creates a company’s purchase scenario.

Mike Wilson, chief strategy of stock market in Morgan Stanley, said in noteing the weekly research that the temporary reduction of definitions between the United States and China was one element that could lead to a more permanent gathering. The decrease in the stock market after MOODY may be an opportunity to purchase DIP.

Wilson said that the association of the return to the return on the stocks is currently approaching 0 on a scale from -1 to 1. In our opinion, the outbreak of the return for 10 years exceeds 4.50 % will take this link negatively, and pays more sensitivity to the shares, “he said.

“Moody’s reduction in the end of the day in the American credit rating last Friday is also worth considering this conversation, although Moody’s is the last agency to reduce the American credit rating, a process that started 14 years ago in the summer of 2011,” Wilson wrote.

MOODY reduces the American credit rating on the height of debt

“In short, a break above 4.50 % in the return for 10 years can lead to modest pressure to evaluate (5 % pressure about what we got in its previous historical analogues)-we will be buying from this decrease,” he said.

Wilson’s memo said that the economists in Morgan Stanley are less optimistic about two other elements in their review menu to attend a market march, including conditions that allow the Federal Reserve to start lower interest rates and a decrease in return on the treasury note for 10 years.

Treasury Secretary Payet refuses to reduce credit in Moody’s in the United States as a backward indicator.

Treasury Secretary, Scott Payett, rejected the classification as a late economy. (Nathan Howard / Reuters / Reuters)

The basic personal consumption expenses (PCE), which is a measure of the main inflation, will increase in May and continue to increase during the summer, the company’s predictions project that it predicts that the basic personal consumption expenditures index (PCE) and continues to increase during the summer. Core PCE 2.6 % was in April, while the standard PCE index was 2.3 % last month – both numbers are higher than the FBI targeting rate by 2 %.

“In short, we are unlikely to see in the near-term progress on the last two elements in our check list for a more sustainable collection-assuming a more incident and 10-year-old feeding less than 4.0 % without stagnation data,” Wilson wrote.

The Central Bank of Oman says that the budget deficit in the United States to expand the scope of the national debt to 156 % of GDP

MOODY reduced the American credit rating on the growing national debt. (Saul Loeb / AFP via Getty Images / Getty Images)

On Friday, Moody Classifications reduced the first -class US credit rating from AAA to AA1, explaining that this step “reflects more than a decade in government debt rates and pays interest to much higher levels of similarly classified weapons.”

The company said: “The successive American departments and congress have failed to agree on measures to reflect the direction of the large annual financial deficit and the increasing interest costs.” “We do not believe that the multiple discounts of the year in spending and mandatory deficit will result from the current financial proposals.”

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Moodyz added that he believes that the financial view of the federal government is exacerbated in the coming years, with continued spending on entitlement programs such as Medicare, social security in the rise amid the aging of the population of the United States and interest payments on the growing debts due to high interest rates and the expansion of deficit.