Four significant risks still hangs over equity markets - Morgan Stanley

FXStreet notes that markets have been weak in September. The good news is that prices have corrected, with the S&P 500 now down about 10% from its August highs. But the bad news is that four specific risks are still hanging over the market and all are yet to be resolved. Andrew Sheets, Chief Cross-Asset Strategist at Morgan Stanley advises investors to remain patient. 

“Our economists and I think many others in the market had been assuming that the US would approve about $1 trillion of additional stimulus. But recent progress on this front has not been promising. And the emerging controversy over the fate of the US Supreme Court only further complicates this process. Indeed, it's very possible that ahead of the US election, Congress only has time to either pass additional stimulus, or confirm a new Supreme Court justice, but not do both. A trillion-dollar swing in economic support is, needless to say, a very big deal and has a large bearing on what the near-term economic outlook could look like.”

“History suggests that markets often struggle in the months leading up to a US presidential election, especially when the result looks uncertain or might be close.”

starting to rise again in Europe, while in the US 37 states now have R rates above 1.”

“It's been over four years since the original vote but the Brexit saga remains unresolved. And key deadlines are approaching over the next two months. Morgan Stanley's economists have recently raised their odds of a ‘no-deal’ outcome. The scenario that would create the most near-term market and economic uncertainty.”