Morgan Stanley Issues Shocker With First 2012 Forecast: Sees Consensus As Too Optimistic
Morgan Stanley Issues Shocker With First 2012 Forecast: Says S&P Will Close Year At 1167, Sees Consensus As Too Optimistic
Submitted by Tyler Durden on 01/03/2012 07:42
The market has not even opened for regular trading for the first trading day of the year and already predictions for the final print are made. Enter Morgan Stanley, which unlike last year, when it was painfully bullish has come out with an uncharacteristic and quite bearish prediction: "We are establishing a 2012 year-end price target of 1167, representing 7% downside from today’s price. The consensus top-down view has coalesced, with limited variation, around 1350, making our forecast 13% more conservative than the “muddle through” scenario implied by consensus." And the primary reason for this - a collapse in earnings predictions: "We are launching our 2013 EPS estimate of $103.1, 15% below the bottom-up consensus forecast of $121.1." Time to reevaluate those record corporate profit margin assumptions? That said, make no mistake - just like SocGen, Goldman, UBS and everyone else, the sole purpose of these bearish forecasts is to get the market to drop low enough to give the Fed cover for QE X. And let's not forget that Morgan Stanley's new chief economist is none other than Vince Reinhart, the man who personally recommended selling Treasury puts to get rates lower almost a decade ago. Because as Adam Parker, who made the forecast, knows all too well, if the market indeed closes red for 2012, so will Wall Street bonuses.
First, here is MS' brief review of 2011:
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http://www.zerohedge.com/news/morgan-stanley-issues-shocker-first-2012-forecast-sees-sp-close-year-1167-sees-consensus-too-op