Morgan Stanley: “Something Is Not Quite Right”
by Tyler Durden
ZeroHedge.com
Thu, 05/30/2019
Just a few days after Morgan Stanley’s chief equity strategy, Michael Wilson, warned that “volatility is about to rise… a lot”, the executive director of Morgan Stanley’s institutional equity trading group, Chris Metli, has sent out an ominous warning of his own, cautioning the bank’s clients that “this week has been one of those markets where something just doesn’t feel right.”
What prompted this concern.
As Metli explains, “the underperformance of defensives in a down tape and with bonds bid is unusual, and this week defensives have posted the worst P/L relative to SPX and bonds of the last 5 years outside of December 2018 and the Healthcare selloff in April 2019 (using Staples/Utes/Real Estate/Healthcare for defensives).”
On one hand this could just be a little profit taking in Defensive areas, the MS strategist observes. There has been a strong rotation into Defensive sectors as well as Low Vol and High Div funds and out of Cyclicals and Value products.
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