FAST FIVE: "It's Time To Lighten Exposure": Here Are The Next Four Risks For Markets
Indeed, as Morgan Stanley's chief global strategist writes “maybe that's the challenge; expectations for the Fed had grown to an extent that was hard to meet.” In any case, with the Fed now in the rearview mirror, and as markets adjust through the immediate reaction (lower), we need to turn our attention to what's next.
COVID-19 cases (month-end): Summer, when schools are out and it's easy to be outdoors, was always going to be the 'easy part' for social distancing.
For hedges: i) Put spread collars; ii) EM FX; and iii) Commodities with more challenging supply/demand dynamics (oil, aluminium and iron ore).
Utilities is the more interesting sector here, given the sector's ESG angle.
MS sees little local incentive to strengthen FX, given the current challenges.