Morgan Stanley analysts eyed the.....>

US TSYS/STOCKS: Morgan Stanley analysts eyed the markets and said, "if it feels

more idiosyncratic, it is." They added that "macro and micro correlations remain

unusually low. This is consistent with a 'late-cycle' set-up and reinforces our

preference for equity over credit." 

- They added that the "'correlation crash' is still with us: Macro and micro

correlations remain significantly lower than one, three or five years ago. It is

an important reason why volatility remains so stubbornly low, even after last

week's moves." 

- They said this is "consistent with 'late-cycle'" as "the last time macro and

micro correlations were this low was 2005-07. That's no accident; we think there

are good fundamental reasons why correlations tend to be lower, and

idiosyncratic risk higher, late in the cycle."