Say this for Morgan Stanley — it is not afraid to buck the trend. With world stocks up more than five percent in the few days that have been April trading and up 24 percent since hitting a low on March 9, the bank has decided bale out. In its latest strategy report, MS says it is moving 5 percent out of stocks to neutral. It likes cash.

This puts Morgan Stanley in the camp that sees the current stock rally as just part of a bear market. It says it is looking at fundamentals to get better before it will decide that trouble is past. 

“The three fundamentals we look at are : 1) earnings; 2) U.S. housing; and 3) banks’ balance sheets”,  it says.

Interestingly, MS also admits it could be wrong. For one thing, it could be baling out too early with the rally continuing for “positioning and ’second derivative’ reasons.

More significantly: ”If policy action is successful in reparing banks’ balance sheets and putting a floor under house prices, the next bull market may already have started”.

So back to you, again

(Reuters photo: Brendan McDermid)