The long-term trend is optimistic, Morgan Stanley CEO: others are fearful, you have to be greedy

Thomson Reuters reported that Morgan Stanley (Morgan Stanley) Chief Executive Officer (CEO) James Gorman pointed out at a conference hosted by the Australian Financial Review (AFR) on March 8 that the Russian invasion of Ukraine has led to heightened global uncertainty and the Federal Reserve. The FED should not take bold action at this juncture.

Gorman expects that the Fed will raise interest rates in an orderly manner, with no surprises. He said that the Fed is really in a dilemma at the moment, and inflation is undoubtedly rising, and it’s not temporary.

Gorman said in an interview at a business summit on the 8th that when everyone else is afraid, you have to be greedy; when everyone else is greedy, you have to be careful. Everyone is scared and volatility is high right now, which means the opportunity has come. That’s the market mechanism, and it’s going to go up in the long run, so he’s not worried at all, he said.

Gorman pointed out that the Fed must raise interest rates at the same time as ensuring that the US economy does not fall into recession, because once there is a recession, there will be very bad stagnant inflation. Gorman also mentioned that it is impossible for cryptocurrencies to replace reserve currencies. If Morgan Stanley clients want to invest, he would recommend that their net assets account for no more than 1%.

Bloomberg reported on the 7th that Paul Donovan, global chief economist at UBS Wealth Management, pointed out that the global economic situation will not be as bad as it was in the 1970s (stagnant inflation), because crude oil exporters now consume more than they did in the 1970s. will support global demand.

The National Bank of Canada estimates that when inflation is factored in, crude oil would need to exceed $170 a barrel to break through the all-time highs set in 2008.

The Wall Street Journal reported that New York Federal Reserve Bank President John Williams pointed out on March 3 that the Russian-Ukrainian war has further heightened uncertainty, which in turn limits the room for the Fed to provide guidance.

Williams also said at the time that the U.S. economy now has strong growth momentum and no stagnant inflation.

The U.S. Treasury Department announced that the real yield on the U.S. 10-year Treasury bond fell for the second consecutive trading day, falling 0.06 percentage points to -0.99% on March 7, the lowest since December 31, 2021 (-1.04%).

CME Group’s FedWatch tool shows that the probability of the Fed’s March meeting (15-16) is 8.0% (the federal funds rate will remain at 0-0.25%), and the probability of raising interest rates by one yard to 0.25-0.5% is 92.0%.

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