Morgan Stanley says next recession is 2 years away, but expects "significant stock market correction" in next 3-6 months

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Morgan Stanley tries to reassure investors about its confidence in the mid-term economic outlook, following its triple sell warning on equities two weeks ago.

Economists at the US investment bank stressed that a global recession was probably still two years away and that, while they expect a significant stock market correction in the next three to six months, they are buyers of equities on a time-frame of one year or longer.

In a note issued yesterday, Teun Draaisma, Morgan Stanley's chief European equity strategist, said: "We wish to make sure clients are well aware of the main elements of our stance, not just our tactical asset allocation view."

...

With the next recession still two years away, they predict that equities will reach new highs after the upcoming correction, with more large mergers and acquisitions driven by a further increase in leveraged buyouts.

But this ongoing bull market will also be characterised by more frequent and larger corrections.

http://www.telegraph.co.uk/money/main.jhtm...cnmorgan119.xml

Dated June 20 2007

[Anais Nin 0]

I think some of our partly-educated forum members are familiar with basic economic lore around the concept of the business cycle.

The good news is that it appears the oft-quoted market maxim, "America sneezes and the rest of the world catches a cold" no longer holds true. The rest of the world is no longer in synch with U.S. Economic Activitiy. China has eclipsed America in this regard, and now the world holds due regard to markets in Shanghai and Hong Kong.

[Jasman0717 9]

Maybe it's time for me to move everything into stable value for a while. I did loose a bundle yesterday but the market looks like it is trying to rebound today so here's hoping