Multiple factors indicate that the stock market is currently bottoming, according to Dan Skelly, managing director at Morgan Stanley.
Skelly says in New CNBC interview That the US is currently experiencing a “production boom” makes the risk-reward ratio for stocks at current valuations look reasonably attractive.
“I don’t want to downplay the conflict in any way, but when you think about it, one year ago we were talking about another major political mess, which was conceivable at the time, and here we don’t think about that as much. And so I think, look, at the end of the day, you’re going to face these challenges day to day, week to week, but the underlying narrative in the United States is one of innovation, one of technology, productivity, one of very strong profits.”
Skelly says Morgan Stanley does not expect a major recession.
“From peak to trough, we’ve seen a 9% correction in the last few months, and we think the market has bottomed out. Look, I’m not going to say we’re not going to retest, but it’s hard to understand the new information that the market is learning so harshly, when we already know that the motivation is to reach a ceasefire and move on beyond all of this.”
The S&P 500 is at 6,848.26 at the time of writing and has risen 3.73% in the past five days.
Skelly believes the market may have reached the 6,300 level.
“Another sign of this is that the VIX, the volatility index, has fallen significantly below 30, and volatility usually has to peak before markets bottom out.”
The VIX is at 19.48 at the time of writing.
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