The Two Ugliest Charts In The World

The S&P 500 closed at an all-time high yesterday.

However, the jaw-dropping world-wide bull market belies the expectations for growth in global GDP and stock market earnings.

"The 25% rally in global equities from last June seems to be driven by a growing conviction that the worst is over and tail risks are fading," wrote Morgan Stanley's Gerard Minack in a research note last week. "This, so far, is not about pricing in a notably stronger economic or earnings outlook."

In other words, the likelihood of worst-case scenarios is falling.

Minack provided these two charts to show the trajectory of GDP and earnings expectations. Notice the downward slopes. Except for Japanese GDP, expectations for everything have been deteriorating. Very ugly.

Gerard Minack, Morgan Stanley