Morgan Stanley’s business confidence index has biggest drop since 2008 financial crisis

J.P. Morgan Chase & Co. is an American multinational investment bank and financial services company headquartered in New York City. JPMorgan Chase is the largest bank in the United States, and the sixth largest bank in the world by total assets as of 2018, to the amount of $2.535 trillion. It is the world’s most valuable bank by market capitalization and was named one of the top stocks to buy in 2019.

The Morgan Stanley Business Conditions Index (MSBCI) is an economic barometer based on an internal monthly canvass of industry analysts in JPMorgan’s North America Equity Research. The MSBCI measures general analyst sentiment as well as component indicators that gauge financing, advance bookings, pricing, hiring, capital spending, and expectations. Since its inception in June 2002, the MSBCI has served as a valuable and effective instrument for anticipating directional moves in the U.S. economy.

Morgan Stanley just published its latest Business Conditions Index and it is shocking.

As reported by Maggie Fitzgerald for CNBC, June 13, 2019:

Morgan Stanley’s Business Conditions Index, which captures turning points in the economy, fell by 32 points in June, to a level of 13 from a level of 45 in May. This drop is the largest one-month decline on record and the lowest level since December 2008 during the financial crisis, according to the firm.

Morgan Stanley said June’s conditions index reading showed notable declines in hiring, hiring plans, capex plans, and business conditions exceptions.

Economist Ellen Zentner said in a note to clients that the sharp MSBCI decline “shows a sharp deterioration in sentiment this month that was broad-based across sectors. Fundamental indicators point to a broad softening of activity, but analysts did not widely attribute the weakening to [Trump’s] trade policy.”

In addition to the sharp drop in the Business Confidence Index, here are other economic indicators of a possible economic slowdown:

  • Last Friday’s much-worse-than-expected jobs report from the Labor Department, showing that the U.S. economy added just 75,000 jobs in May.
  • A report on Thursday showed a spike in jobless claims last week.
  • Manufacturing activity last month grew at the slowest pace in two years.
  • The manufacturing subindex business conditions fell sharply to zero, the lowest level for the subindex on record.
  • The services subindex also fell to 18 from 35.

Meanwhile, another CNBC report on June 12 says “risks are rising for an oil price spike as tensions between the U.S. and Iran increase” which would further exacerbate business confidence.

Analysts say oil could be more than 10% higher, but if the situation in the Middle East intensifies, there are risks of price spikes that take oil to as high as $100 a barrel this summer.

Four years ago, in June 2015, Bob Johnson wrote in Veterans Today that the powerful Israeli lobby, American Israel Public Affairs Committee (AIPAC), was trying to push the U.S. into a war against Iran for Israel’s benefit. (See “Yinon Plan“)

~Eowyn

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Goldbug
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Goldbug

I fully expect a “planned” collapse of the economy before the 2020 election. They will get rid of Trump by hook or by crooks; as it now stands, his economy is his winning ticket.

Auntie Lulu
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Auntie Lulu

I guess we just have to “hold on to our hats” and pray that we get thru come what may.

William
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William

It was understood that the financial powers that be would crash the economy if Trump was elected. I’m surprised it hasn’t happened sooner. It would be very easy for them to do, the entire financial system is a house of cards anyway. I don’t know what he could do to avoid it. Maybe a deal, war with Iran perhaps. But if the economy collapses Trump is toast. People always vote their pocketbooks

Jackie Puppet
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I think Trump was (s)elected, partly to help America get through the impending financial crisis. His business instincts, as opposed to political instincts, can only help America in the long run.

MarkyMark
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MarkyMark

Does anyone remember a similar story at this point in the Obama Administration? Yeah, me neither.

If anything, the national media was doing their damndest to make things look good; they were trying their best to put lipstick on the pig that was the US economy in 2011-all to prop up The One…

Ernest Doodler
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Ernest Doodler

As we slide into the 2020 election, and the uncertainty therein, the economy is going to stagnate because no one wants to hire or make investments with the very real possibility of a Democrat in office. If Trump wins, you’ll see the stock markets rocket into the stratosphere and job growth double again.

True Dan
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True Dan

The article says: “Analysts say oil could be more than 10% higher, but if the situation in the Middle East intensifies, there are risks of price spikes that take oil to as high as $100 a barrel this summer.” It would tell us much more if it had included the current price of oil.

yyz
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yyz

Thank you FOTM for including some exposure to the economic charade that has been going on since the ‘solution’ to the 2008 crisis. John Law would have very impressed so far, but it will end just as badly.

cogitoergosumantra
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cogitoergosumantra

You know, I’ve been religiously following financial business shows like Wall Street Week (Louis Rukeyser), Nightly Business Report (from back when Paul Kangas ran things, before CNBC took over), “Wealth Track” with Consuelo Mack, and “On the Money” (with Becky Quick, previously “Wall Street Journal Report” when Maria Bartiromo ran it before it also got bought out by CNBC). And in 30+ years, I can’t recall ever hearing of an MSBCI… but to be honest, Louis Ruykeyser died years ago and I stopped watching his show when PBS took it away from him; I haven’t watched Wealth Track in years,… Read more »