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In a new research report by Morgan Stanley (NYSE:MS) released on Thursday, the investment firm sees yet another round of global monetary easing.

After previous policy action coupled with risk asset rallies, improved macro data took place but should further easing occur (see QE3), don’t expect a long rally.

Why? The firm points out that current global macro news hasn’t met expectations and from this, look for a broad-based reaction. This includes China and Eurozone rate cuts and additional balance sheet expansion from the Bank of England, Bank of Japan and the Federal Reserve (QE3).

In the short-term, investors will see these actions as a catalyst for a rally but longer-term, it’s unlikely to improve things on a macro level. According to Morgan Stanley, the bulls will enter the picture based on previous central bank action.

Easing Has More Correlation Than Causation

Morgan Stanley sees two qualifications for the effect of monetary policy easing having more correlation than causation when two qualifications are met.

First, it will have a greater likelihood if working in emerging markets with its functioning credit systems and economies unburdened by structural baggage that affect developed economies.

Second, unconventional policy has been vital for the avoidance of systemic stress leading to collapse. Morgan Stanley believes that central bank liquidity can grease the private sector when in trouble (see Lehman collapse). Also important has been been the ECB’s long-term report operation in 2011.

As risk assets had been affected by tail risk of systemic collapse, it reduced risk triggers for a risk rally.

Question: Stimulating Activity or Increasing Risk Asset Prices?

At issue is whether unconventional policy will stimulate activity or increase risk asset prices. Deleveraging cycles simmer monetary policy’s effect on growth while unconventional monetary policy can act as a protector against systemic breakdown. But it doesn’t protect enough to incite a return to normal credit when monetary policy works to spur growth.

In summary, Morgan Stanley sees the important investor issue as whether or not additional unconventional easing can spur a tradable rally in risk assets, sans a sparse or no effect on the macro outlook. The firm isn’t optimistic as growth is the current issue; they believe tradable rallies need improved macro news.