Morgan Stanley prefers Defensives on economic outlook concerns

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Morgan Stanley prefers Defensives on economic outlook concerns
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Morgan Stanley prefers Defensives on economic outlook concerns

Morgan Stanley strategists recommend investors consider quality and defensive investments over growth due to concerns about the economic outlook.

Last week’s weaker-than-expected employment report has added to the perception of a weakening labor trend.“In contrast, the micro data have been less resilient and are showing a more meaningful deterioration in growth, particularly in consumer services, where earnings revisions have recently broken down.”

Consumer confidence surveys, including those from the University of Michigan and the Conference Board, have also slowed, driven by declines in the current conditions component, which typically holds up better under economic pressure. “With our 12-month base case target multiple at 19x, the risk/reward for equities broadly remains unfavorable,” strategists said.

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