Wall Street: Why investors must be satisfied with less growth
Morgan Stanley manager Jim Caron explains why a transition phase is looming in the markets and how investors should adapt to the new world. Three risks at a glance.
Frankfurt - As the past quarters have been marked by unusually high corporate profits, investors must now prepare for a new and less euphoric phase, said Jim Caron, head of investment at Morgan Stanley's Solutions Group, in the Handelsblatt Invest podcast. "We are probably at the peak of this profit growth, and markets are preparing for a new, slower phase," Caron explained, who assembles portfolios for institutional investors and affluent individuals.
Corporate profits in the US S&P 500 index rose by more than 50 percent in the second quarter and by about 30 percent in the first quarter compared to the previous year. Such growth rates are actually only expected after a recession. The profits would also continue to rise in the coming quarters, "only not quite as strongly" according to Caron.
The consequence is that "investors must lower their expectations and be content with slower growth rates."
Written by urgent.news from Handelsblatt's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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