Not everyone is carefree about the current investing environment.Steve Roach,senior lecturer at Yale University and non-executive chairman of Morgan Stanley Asia,has a number of concerns.The history of post-crisis periods is clear:weak and fragile recoveries.The risk of relapse is real.Consider:1.sovereign debt;2.100 dollar oil;3.unrest in the Middle East;and 4.a U.S. consumer in need of major balance sheet repair.
The markets have dismissed the relapse possibility.Do so at your own risk.The Fed has got the U.S. economy on steroids.The risk is when we withdraw Quantitative Easing 2,you've got a weak labor market.How do you sustain an economy on that basis?
Cash flow isn't enough to get companies to go out,expand and hire.Those decisions are based on expectations of future demand.We can't stand in the way of balance sheet repair.
We're creating a whole new generation of zombie consumers,over-indebted and savings-short,Mr.Roach warns.He is a frequent guest on business television.
Founded in 1935,Morgan Stanley is a financial brain trust with offices worldwide,and offers a full scope of financial services to business,institutions and individuals.More than 45,000 people work for the mega-firm.
Morgan Stanley(MS)
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