Morgan Stanley IM: Brace for Impact! Soft Landing to Collide with Hard Data

• The consensus perspective is that the worst is yet to come and the lags from global policy tightening have yet to bite.
• That consensus view also foots to a mild recession or a "soft landing," because while we may see a weakening of economic data, it is still coming from a position of strength.
• In addition the savings rate is still solid and real incomes strong to the point where consumption may hold steady and support GDP - all soft landing sympathies.
• In this case the fact that the data is simply weakening may matter MORE in the near term than the level to which it actually falls.
• But the upcoming run of hard data – data that is directly tied to jobs, retail sales, units of production etc. - is expected to show material signs of weakening.
• As a result, hard data may be on collision course with a soft landing over the coming quarters.

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