CHART OF THE DAY: Morgan Stanley Expects A Horrible Finish For The Market This Year

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Last December, Morgan Stanley’s Adam Parker set an S&P target of 1167 on global GDP slowdown, weak corporate earnings, a rising dollar and companies’ bearish inventory-to-sales ratios.

Butt he market has been strong, so has he thrown in the towel?

Today, he announced he is going 1167 or bust.

Here are his cases:

chart of the day, s&p 500 end of the year results, september 2012

Photo: Morgan Stanley

In case you didn’t know, the S&P stands at 1457.

In a massive presentation on his year-end predictions, Parker explains why:

  • Earnings growth is very poor.
  • Earnings are volatile, and that’s also ominous.
  • Historically, extreme rates (both high and low) are bearish. Our current sub-zero interest rates are bad.
  • Historic price-to-earnings ratios at this time of year suggest a downturn. “Investors are overpaying for cyclical earnings!” he exclaims, adding, “most industry groups appear to be over-earning right now.”

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