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Stocks & Markets Analysis
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Wall Street's fear: The economy may be slowing more than expected

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Molly wealth talk joined discussion · Feb 18, 2022 01:59
Should investors worry about the U.S. economy? According to Zerohedge's an article, Goldman Sachs and Morgan Stanley are worrying about it.

Goldman Sachs, traditionally one of the biggest sellside cheerleaders cautions in its Midday Market Intelligence note, one of the reasons for the sharp drop in risk assets today is not just the resurgence in geopolitical concerns but also "the potential the economy may be slowing more than expected."
Source: Federal Reserve Bank of Philadelphia
Source: Federal Reserve Bank of Philadelphia
A renewal of old concerns -- geopolitical issues, economic growth -- is driving the market to assume a risk-off stance of Thursday. In addition to the political situation in the Ukraine, the Philly Fed -- an important real-time gauge of the economy -- retreated in February. While the +16 reading remains in 'expansionary' territory (anything above '0'), the slowdown comes on the heels of a very strong January reading (+23) and against FactSet consensus expectations for a +22 reading.

The combination of increasing geopolitical concerns and the potential the economy may be slowing more than expected sent the VIX back up to 24, and drove a decline in equities as investors turned to bonds and gold -- both traditional investor perceived 'safe havens'.
Coincidentally, on Monday, Morgan Stanley's chief equity strategist penned an article writing that between the big hit to the US consumer - now that stimmies are no longer funding the relentless spending spree -and the potential for sharp escalation in the Ukraine conflict, "materially increases the odds of a polar vortex for the economy and earnings."

The strategist recommends investors position defensively for more downside.

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Molly wealth talk
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