Morgan Stanley (Morgan Stanley) strategists warned that the recent surge in the U.S. dollar has raised concerns regarding corporate profits, which may make risk assets unsustainable, and observing historical experience, such a strong U.S. dollar has triggered financial or economic crisis.
According to the calculation of the strategist team of DPM,US dollar index (DXY) for every 1% increase inS&P 500 IndexCorporate profits were negatively impacted by 0.5%, and earnings growth in the fourth quarter is forecast to be reduced by 10%.
Morgan Stanley strategists led by Michael Wilson said: “The recent move in the dollar has made risk assets unsustainable, which has caused financial, economic or both crises in the past. While such scenarios are difficult to predict, conditions already available.”
In addition, Morgan Stanley estimatesUS dollar indexIt will reach 118 by the end of the year, with no sign of relief in sight in the short term.
The wild swings in foreign exchange markets are a major pressure on the global economy and corporate profits. Morgan Stanley strategists believe the lows for stocks and the highs for yields may depend on earnings and the trajectory of economic growth, not inflation or the Fed.
Michael Wilson, one of Wall Street’s most vocal bears, has accurately predicted this year’s stock market sell-off. U.S. stocks extended their recent losses on Monday (26th),Dow JonesIt closed down 329 points, down regarding 20% from the high point at the beginning of the year, and officially fell into a bear market.S&P 500 IndexIt fell regarding 1% and set a new low for this year.
When it comes to the impact of a strong dollar on the stock market, Morgan Stanley estimates that from this fall to early next year,S&P 500 IndexThe bear market is far from over with a drop to the target range of 3000-3400 points.