{"id":20481,"date":"2023-05-02T14:10:40","date_gmt":"2023-05-02T14:10:40","guid":{"rendered":"https:\/\/crowdfundjunction.com\/blog\/morgan-stanley-strategist-warns-of-equities-sell-off-in-response-to-hawkish-fed-message-economics-bitcoin-news\/"},"modified":"2023-05-02T14:10:40","modified_gmt":"2023-05-02T14:10:40","slug":"morgan-stanley-strategist-warns-of-equities-sell-off-in-response-to-hawkish-fed-message-economics-bitcoin-news","status":"publish","type":"post","link":"https:\/\/crowdfundjunction.com\/blog\/morgan-stanley-strategist-warns-of-equities-sell-off-in-response-to-hawkish-fed-message-economics-bitcoin-news\/","title":{"rendered":"Morgan Stanley Strategist Warns of Equities Sell-Off in Response to ‘Hawkish’ Fed Message \u2013 Economics Bitcoin News"},"content":{"rendered":"

(Originally posted on : Bitcoin News )<\/b>
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On Monday, Morgan Stanley\u2019s equity strategist, Michael Wilson, shared his thoughts on the state of Wall Street. He expressed his belief that a sell-off could be imminent, and that this could occur as a result of U.S. Federal Reserve chairman Jerome Powell\u2019s upcoming remarks on Wednesday. Furthermore, there has been a great deal of conjecture surrounding the possibility of the central bank cutting the federal funds rate multiple times throughout the year. However, Wilson believes that investors who are expecting this outcome will ultimately be disappointed.<\/strong><\/p>\n

Powell\u2019s Message Could Spark a \u2018Near-Term Negative Surprise for Equities\u2019<\/h2>\n

This Wednesday, all eyes will be on the Federal Open Market Committee (FOMC) meeting, as the U.S. Federal Reserve is poised to raise the benchmark interest rate by 25 basis points (bps). While some economists predict<\/a> that this hike will be the final one of the year, a few market observers anticipate multiple rate cuts in the future. These speculators point to the recent banking industry turmoil<\/a> in the U.S. as a potential catalyst for the Fed to loosen its monetary policy.<\/p>\n

However, there are several analysts who believe that investors expecting cuts are in for a rude awakening. They caution that the Fed\u2019s commitment to holding rates high and not cutting this year is unwavering, due to persistent inflation. According to Morgan Stanley\u2019s equity strategist, Michael Wilson, U.S. equity markets may be in for a rough ride this week if chairman Jerome Powell fails to meet the market\u2019s expectations of a benchmark rate cut.<\/p>\n

Wilson warns<\/a> that a \u201chawkish\u201d message from Powell could trigger a \u201cnear-term negative surprise for equities,\u201d causing a sell-off. Wilson also notes that the market has grown increasingly reliant on tech stocks with large valuations, which could exacerbate the impact of any negative news. Furthermore, he warns that investors who are banking on the Fed cutting rates this year are likely to be frustrated with the outcome.<\/p>\n

\u201cWe believe that equities are priced for an optimistic policy outcome (rate cuts in \u201923 without the growth downside),\u201d Wilson stated in his note to investors.<\/p>\n

Fed Officials Desire to Avoid the Mistakes of Past Fed Chairs<\/h2>\n

The sentiment that the Federal Reserve will maintain its strict stance on interest rates is not limited to Morgan Stanley\u2019s equity strategist. Claudia Sahm, an American economist and macroeconomic expert, echoed this sentiment on Sunday, stating that Powell had made it clear that the Fed would not cut rates this year and that people should \u201cbelieve him.\u201d<\/p>\n

In a Twitter thread<\/a>, Sahm thinks the Fed\u2019s stance will be strict for three reasons: the desire to avoid the mistakes of past Fed chairs, the reverence for former chair Paul Volcker\u2019s approach to monetary policy, and the personal experiences of current Fed officials with high inflation in the 1970s and early 1980s. Sahm tweeted<\/a>:<\/p>\n

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Markets expect the Fed to cut multiple times this year\u2014referred to as a pivot\u2014while the Fed says it will hold rates high and not cut this year. I believe the Fed.<\/p>\n<\/blockquote>\n

In response to Claudia Sahm\u2019s comments on the Federal Reserve\u2019s commitment to holding rates high, the Twitter account Wall Street Silver pointed out<\/a> that while Paul Volcker\u2019s monetary policy and the emergence of new oil sources in the early 1980s helped control inflation, the underlying problems persist.<\/p>\n

\u201cThe Fed can\u2019t solve this problem,\u201d Wall Street Silver said. They can kill the economy, but as soon as rates come down, the same underlying problems exist and inflation roars back. The Fed only has one tool and will print us into oblivion eventually, because they can\u2019t fix this.\u201d Sahm clarified<\/a> that she was merely explaining \u201chow the history is viewed inside the Fed, not what\u2019s true.\u201d<\/p>\n

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\nTags in this story
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Claudia Sahm<\/a>, Economist<\/a>, equity strategist<\/a>, Federal Funds Rate<\/a>, inflation<\/a>, interest rates<\/a>, Investors<\/a>, jerome powell<\/a>, Michael Wilson<\/a>, Monetary Policy<\/a>, morgan stanley<\/a>, Paul Volcker<\/a>, Sell Off<\/a>, U.S. Federal Reserve<\/a>, Wall Street<\/a><\/div>\n<\/div>\n

Do you think the Federal Reserve\u2019s commitment to holding rates high will be enough to control inflation, or will the underlying problems persist and lead to a potential economic crisis? Share your thoughts in the comments section below.<\/strong><\/em><\/p>\n

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\nJamie Redman <\/h6>\n

\nJamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 7,000 articles for Bitcoin.com News about the disruptive protocols emerging today.

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Image Credits<\/b>: Shutterstock, Pixabay, Wiki Commons<\/em><\/p>\n

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Disclaimer<\/strong>: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com<\/a> does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.<\/p>\n<\/div>\n

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