Morgan Stanley

Conditions for a new bull market are slowly getting satisfied. The yield curve has stopped flattening, liquidity is improving, valuations appear supportive and profit margin expansion is a growing possibility in the coming months, says Morgan Stanley Research.

Morgan Stanley has rolled out its market target to December2013 as 23,069. This implies that the market will be trading at 14.9 tines the FY14 estimated Sensex earnings in December 2013.

Morgan Stanley is expecting the Sensex earnings growth to be 10% and 19% in FY13 and FY14. Significantly, broad market earnings may have troughed or could trough in the current quarter. Revenue growth should slowly accelerate in the coming months. Margins could rise in the coming months with a favourable base effect driven by the relative movement in the current and fiscal deficit. Interest rates are already down YoY (year-on-year), and should stem the steep rise witnessed in interest costs in the previous 12 months. The risk to earnings is that the investment rate collapses, although recent signals suggest that the public sector is starting to spend money.

The key risks are that commodity prices rise quickly, bringing inflation pressures to the fore, and global risk appetite wanes as global policy makers slip into another cycle of complacency. Mid-term polls are also a possibility, but it is not necessarily seen as a downside risk to stocks.

Morgan Stanley observes that the decisive policy action at home (reduction in subsidies and opening up of FDI) and, more crucially, concerted action by European and US central banks have reduced India’s tail risk linked to poor macro stability (twin deficit).

Accordingly, the research agency has gone underweight on consumer staples and has raised energy and materials stocks to overweight. Also, it has taken industrials to neutral. It has trimmed technology by 100 basis points. Consequently, the average sector position has expanded, and it is seen as an emerging strategy, as the average correlations of stocks to the market appear to be falling and no longer merits extreme focus on stock picking

MoneyLife

In 1946, Hungary issued banknotes of a face value of 1,000,000,000,000,000,000 pengő (one quintillion pengő) – the world’s highest denomination ever and one of most depreciated currencies. In 2006, 100 billion Zimbabwe dollars were just enough to buy three eggs. These are all consequences of the hyperinflation in the history of mankind.
Everyone thought this only happens to third world countries but that is completely wrong. The reality has demonstrated that regardless of the stabilized economy or large-the sized country, if national leaders do not handle well, the cost is unavoidable. BMG BullionBars has recently launched a series of numerous currencies that have gone bust tragically through the long-term history. Some disappeared quickly while others took a century or more.

According to Morgan Stanley’s report in 2009, there’s “no historical precedent” for an economy exceeding a 250% debt-to-GDP ratio without undergoing some kinds of financial crisis or high inflation. However, American total debt now including the present value of future liabilities like Social Security and Medicare surpasses GDP by over 400% and this year’s U.S. budget deficit will be $1.5 trillion, an amount never before seen in history. Since the Federal Reserve’s creation in 1913, the dollar has lost 95% of its purchasing power so that the dollar is high-possible to be added to the list of the least valuable currencies, which will lead to serious consequences in the standard of living in America in particular and all over the world in general.

Hungary – 10 million pengo, 1945 is the world’s highest denomination ever and one of most depreciated currencies