Morgan Stanley: This Is the Most Bullish Potential Event in 2012
With market participants in a near state of perpetual pessimism it wouldn’t be shocking if some of these fears result in a wall of worry built on “better than expected” news. But Morgan Stanley’s analysts think the unexpected surprise could come from one of the less obvious events in 2012 – the US Presidential election:
“Where could we be wrong? We worry all the time about our market call, but at the end of the day, we are not really worried that Europe is going to be “solved” or that its economy will strongly grow. We also don’t think strong corporate profitability relative to expectations will save the day. To us, the biggest bull case for US equities is based on the huge cash balances and the potential belief that they will be more actively and productively deployed. The biggest possibility here would be Romney winning the Presidential election. Our guess is that the market multiple would expand if in fact more investors start believing Romney will win.”
It’s an interesting observation. Romney’s a closet Keynesian and much of his “balance budget” rhetoric could turn out to be nothing more than election talk. Plus, a continued Obama Presidency is likely to run into further stonewalling in Congress. Romney, the stock market friendly candidate? Hard to imagine given the fact that Obama’s Presidency has been unusually friendly to the equity markets in his first term…..
Cullen Roche
Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.
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21 Comments
Cullen,
I am a Taiwanese. From my point of view, this President and his economic team have been doing almost everything to fawn on Wall Street deliberately since inauguration. It’s really ironic to learn that Morgan Stanley seems to want to get rid of them as soon as possible.
Because for WS is never enough. They want more money, more power, less taxes, less regulation. Ok, a regulated banking system is a necessary tool for the economic system. BUT NOT THIS ONE. These zombies do need our blood to live just one day more.
MS knows that Obama won’t need Wall Street anymore after he is reelected. They are afraid of being thrown under the bus.
That’s an amateurish comment, and a ridiculous one from MS.
I’m surprised that a for-profit company would issue such a silly statement.
After I drank my coffee this morning I looked carefully at the bottom of the cup and here is what it told me; the market can go up or down before AND after the election. I’m waiting for a confirmation of this prediction by my favorite numerologist who is currently busy preparing a presentation for CNBC.
LOL, I can’t wait for the outcome! Thanks for that.
The most bullish potential events for 2H12:
(1) EMU/EU launches another shock and awe campaign to stem the Euro crisis.
(2) Congress and White House deliver measures to prevent Fiscal Cliff before end of year.
(3) Romney wins election.
So the Romney factor is market friendly in my view. But it pales in comparison to any EMU and U.S. fiscal cliff actions.
(1) and (2) should lead to much improved economic outlook and convince market there will be no recession until at least late 2013.
That’s just ridiculous. MS is my broker/bank, and there are so many reasons I want to fire them. The only reason I stay with them is that the guys I have have been with my family for 25 years, and started as smith barney. MS are a bunch of turds. Sorry Cullen–I hope you’ll let me slide for my foul language.
Perception trumps reality in the short-term. Enough people think that Romney will be good for the market that they will act on it. And, as MS pointed out, Obama has what could be the least cooperative Congress ever.
IF anyone including CONGRESS disagrees with obama then its uncororative? How about just the fact is if one just DISAGREES with his policies? Hell, all he wants is higher taxes and more spending. If Romney wins and Dems retain Senate even if Reps retain the House or IF hussain obama is reelected then JUST pull the handle and flush the Country. Reagan had to deal with a majority Denocrat House and Senate. Bill Clinton did not balance any budget. He said that budget could not be balanced. When Repubs took majority in 11-94 the stock market from left to right begin to MOVE UP that is ipso facto. obama is an incopetent empty suit pseudo savant genius and only knows communist as his back ground. Read his books and all his mentors were card carrying communist. That is ipso facto.
Funny, because that’s kind of how I feel about Romney, without the obviously humorous “card-carrying communist” comment of course.
If Romney gets elected, he is likely to enable policies that will crush the American economy so badly that America won’t have to worry about neoliberal economics, or the Republican party, for a generation or more after they are shown the door.
Be careful what you wish for!
Humorous??? Hell, read his books. I put om gas mask held my nose and did so. Frank Marshall Davis and most others ( his white grandparents) were communist. His father was same; although he did not know his father as his father wqas like many gheto fathers and was not around. He (hussain obama) is also alledgedly Filius Nullis. Anyone that could leave condensation on a mirror would be an improvement over obama.
lighteredknot – ignorant bigot who can’t spell isn’t any way to go through life son. Please troll on a site where people care about your opinion.
From my perspective, Republicans, including especially Romney, are attempting economic blackmail on the U.S. We’ve seen that repeatedly — most notoriously with their refusal to increase the debt ceiling. If Obama wins (as I suspect he will given Romney’s 1% persona), we all know the Republicans will double down in their economic civil war.
The notion that “Romney’s a closet Keynesian” is childish and dangerous, in my opinion. Romney seems to have no knowledge of macroeconomics, and his economic advisors are monetarists…
Detroit Dan: You are now living in a third world country/state (MI) If obama is reelected your town and state will be looking at Greece like rioting and looting. The USA Debt $15 + trillion CAN NOT BE PAID. Do you not understand that? I figure you are a union guy and that clouds your reasoning? What is obama’s accomplishments. What experience did he have running for Pres? Going over seas to muslim countries and apoligizing for America and bowing down to muslim kings etc. He ran in 2008 saying he had a plan. When he went into office in Jan 2009 he said ” We have to come up with a plan”. He still has no plan and continues to speak in abstract generalities. He is a pseudo9 savant genius. Why does he not release ANY personal college or any records. Romney has business sense. obama has communist sense.
“Romney’s a closet Keynesian”………. who the heck knows what he is. He seems to shift around a lot. I don’t think the markets are nearly as focused on the election as on other factors. I think this assessment by MS is BS………
I saw a similar read on the markets today vis a vis high rate CDs and how there appears to be a yield jump right after the election.
Do any of you ever read this blog? From most of your comments, I sincerely doubt it.
I have no idea whether a Romney win would be bullish for the overall averages or not. MS shouldn’t be talking such nonsense, but I suppose they are just talking their book. They want people to buy stocks. But a Republican win would be good for particular industries (think coal, nuclear, and oil drilling). It might be good for dividend payers if the current tax break is retained. And unified government with a whole Congress and the President of the same party is bullish in that they can get things done.