Wednesday, June 17, 2009

“Phenomenally accurate forecasts” 

Sometimes common sense comes from the most unexpected places. Consider this bearish take on the stock market from – better sit down for this – a Morgan Stanley strategist, Jason Todd: “Equity markets now implicitly need a V-shaped recovery to sustain further gains,” he told a reporter for the Wall Street Journal yesterday. “We do not expect such a recovery and therefore believe the next move is more likely to be down than up.” What’s next? A warning from Abby Cohen, perhaps, to lighten up on stocks?  Actually, it looks like traders aren’t waiting for the preternaturally bullish Abby to sound the alarm, since they pummeled the Dow Industrials for a nearly 300-point loss in the last two days. That’s not much compared to the heady days of last autumn, when we saw the blue chip average fall more than twice that in mere hours. But it does represent a minor triumph of head over heart at a time when green shoots of recovery have been spotted growing out of every crack in the asphalt from New York to Michigan to California.