Market correction was just an ‘appetizer’ for what’s to come later this year, Morgan Stanley says, Walmart shares down 10% today

I was listening to Bloomberg the other day and a portfolio manager made the point that “usually we don’t ‘V’ out of these things.” Meaning when turbulence sets in and sentiment changes to the downside it is not typically the case that people just turn around immediately and start buying hand over fist once things reach a more reasonable level. Usually there’s a bit of a climb. More of a “bumpy checkmark.”

Saying this, V shaped recoveries do happen from time to time. Morgan Stanley analyst Andrew Sheets seems to think however that there are more downstrokes to go still.

(From CNBC)

On Feb. 8, the Dow Jones industrial average, S&P 500 and Nasdaq composite all closed about 10 percent below record highs set Jan. 26, notching the first pullback of that magnitude since 2016.

Andrew Sheets, chief cross-asset strategist at Morgan Stanley, said in a note Monday that those declines were just an “appetizer, not the main course.”

“Our cycle models suggest that [developed markets] remain in the late stages of a late-cycle environment,” said Sheets. “Rising equities, rising inflation, tightening policy, higher commodity prices and higher volatility are (in our view) a pretty normal pattern if that view is correct.”

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Meanwhile Walmart shares just tumbled into a serious downdraft.

(From MarketWatch)

Walmart surprised the market with an earnings miss, its first in 10 quarters, as adjusted per-share earnings came in at $1.33, below the $1.37 consensus of analysts polled by FactSet. The miss overshadowed a revenue beat, and the shares had tumbled almost 10% by midday. That puts them on pace to mark their worst-ever dollar decline and worst percentage drop since October of 2015, as MarketWatch’s Mark DeCambre has reported.

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