Tags: Morgan Stanley | inflation | us | economy

Morgan Stanley: Big Bout of Inflation is on the Way

By    |   Monday, 15 Nov 2010 02:33 PM

Several indicators point to a huge wave of inflation in coming months, according to a series of charts published by Morgan Stanley and obtained by Business Insider.

The charts show:

• Inflation has surged in emerging markets during the past year – to about 5 percent from about 3 percent. The real problem isn’t China, but India, where inflation has almost reached double digits.

• Inflation also is on the rise in developed western nations, surpassing 3 percent in the United Kingdom, for example.

• The yield curve in the United States has steepened to record levels, with the 10-year Treasury yielding 233 more basis point than two-year Treasurys.

• Consumer expectations of inflation in the U.S. have risen to 3 percent from 2.2 percent in the last two months.

• Commodity prices are soaring 64 percent from a year earlier.

To be sure, Morgan Stanley economists show that rising inflation doesn’t necessarily correlate with falling corporate profits. So a spike upward in inflation could lead investors to flee bonds for stocks, they say.

Others are bullish on stocks too. “The retail-sales growth is encouraging,” Stanley Nabi, vice chairman of Silvercrest Asset Management Group, tells Bloomberg.

“The consumer is coming back. I believe we’ll see retailers’ figures steadily up. ... Even if we see a stock consolidation, that will not last long. The trend for equities is higher.”

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Several indicators point to a huge wave of inflation in coming months, according to a series of charts published by Morgan Stanley and obtained by Business Insider. The charts show: • Inflation has surged in emerging markets during the past year to about 5 percent...
Morgan Stanley,inflation,us,economy
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2010-33-15
Monday, 15 Nov 2010 02:33 PM
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