Winter of 'disconnect': Morgan Stanley's Mike Wilson braces for 20%+ stock drop (via CNBCFastMoney)
S&P 500"Even though a majority of institutional clients think we're probably going to be in a recession, they don't seem to be afraid of it," the firm's CIO and chief U.S. equity strategist told CNBC's "financials
on Friday, will jolt the market by coming in sharply below expectations. He believes investors will be surprised by how dramatically earnings need to adjust. "That's another area investors are being a little bit complacent," he said. "Costs are increasing faster than net revenues.""The full-year estimate has got to come down," he added. "Negative operating leverage is really starting to flow through to the income statement from the balance sheet... This is a very underappreciated development during Covid. We over-earned during the pandemic because there was positive operating leverage.
And, investors could get hit with a double whammy due to the timing of the next Federal Reserve interest rate decision on Feb. 1. Wilson anticipates the Fed won't appease investors by signaling plans to pivot. "Our call is predicated mostly on earnings and the fact that the Fed probably isn't going to be as reactive to a slowdown as they have been historically," Wilson said. "They're not going to be slashing rates into a growth slowdown."
Canada Latest News, Canada Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Stock market outlook: S&P 500 could fall 22%, Morgan Stanley saysThe S&P 500 could fall another 22% and investors' view of more downside for stocks is too mild, Morgan Stanley says
Read more »
Morgan Stanley COO Jon Pruzan to retireMorgan Stanley Chief Operating Officer Jon Pruzan will retire from the bank at the end of the month, according to a memo seen by Reuters.
Read more »
Morgan Stanley COO to retire at month’s endMorgan Stanley on Monday said that Chief Operating Officer Jonathan Pruzan would retire from his position on Jan. 31. Chief Executive James Gorman said that...
Read more »
S&P 500 could sink another 22%, Morgan Stanley warnsMorgan Stanley analysts have warned the U.S. stock market could plunge by another 22% this year because investors are underestimating corporate earnings.
Read more »
China's GDP growth forecast for 2023 raised to 5.7% – Morgan StanleyAnalysts at Morgan Stanley raised their forecast for China’s Gross Domestic Product (GDP) this year to above 5.0%. Key quotes 'If policy can remove ba
Read more »
Stocks could slump another 20%, Morgan Stanley saysINVESTOR ALERT: Wall Street forecasters are increasingly bearish as they eye a potential recession, which could send stocks tumbling. alabamanewsnetwork
Read more »