One Morgan Stanley analyst said we are entering a ‘downturn’ phase for the U.S. markets.
U.S. stock markets were knocked off their record highs during after hours trading after Apple issued a revenue warning. Dow Jones Industrial Average (DJIA) futures slipped 178 points pointing to a weak opening on Tuesday.
At the same time, Morgan Stanley issued a warning of its own. In a note to clients, chief cross-asset strategist Andrew Sheets said we’re approaching the end of this current market cycle, citing a long list of warning signs:
Historically, in the ‘downturn’ phase of our indicator, long-dated bonds outperform stocks. Defensive and large-cap equities (modestly) outperform cyclicals and small caps. U.S. stocks (modestly) outperform those in the rest of the world. Investment grade credit returns more than high yield. Precious metals outperform other commodities.
These alarm bells have been ringing for a while, argues Sheets.
All have been happening, not just year-to-date, but for the better part of a year.
Dow futures in triple-digit slide
Dow futures contracts slipped as much as 178 points on Tuesday as traders return to their desks after Presidents’ Day.