Morgan Stanley’s Mike Wilson on the bear market and the S&P 500
There has been a lot of debate among market watchers about when this bear market will bottom out, after a turbulent first half of the year for equities. But Morgan Stanley’s chief investment officer believes that the end of this bear market will come “fairly quickly”. Mike Wilson, also the investment bank’s head of US equities strategist, told CNBC on Friday that it was because the economic cycle has been “extraordinarily fast”[ads1];. “The downturn itself, V-shaped recovery … and then the timing of the Fed and … peak employment. So we’re just tearing through this cycle, much faster than we’ve seen in previous cycles,” he told CNBC’s Squawk Box Asia. ” “And that’s good news. Because it means the conclusion of this bear market will come pretty quickly, you know, it’s going to be painful, but it’s going to go fast.” Read more Has the bear market reached the bottom? Goldmans Oppenheimer pronounces his verdict – and reveals where he sees “great opportunities” Is the bear market about to end? Here’s an indicator that the pros say to follow closely Citi names its ‘highest conviction ideas’ for the second half of 2022 – and gives an upside of 85% Last month, the S&P 500 fell to a bear market – or 20% of the last peaks affected in January – and remains there for the time being. The Nasdaq and Dow Jones Industrial Average have also fallen, falling around 28% and 16% respectively this year. It comes after a rough first half – the worst since 1970 – when fears of a recession and high inflation caused investors to flee equities. At what level will the S&P 500 review? The S&P 500 closed at 3,863.16 on Friday – and Wilson says that if a recession occurs, the bottom of the S&P 500 will likely be around the 3,000 level. However, in a soft landing scenario, where a recession is avoided, he expects the bottom to reach around 3,400. However, he stressed that the strong dollar represents a significant headwind for the index. “The S&P 500 is very much exploited for currency,” Wilson said. “Right now [the dollar is] up 17% from year to year, and we think it may even go higher until the Fed swings. So you look at somewhere between 8% and 10% headwinds for S&P revenue growth. “He added that although there is no recession, there is still” meaningful “downside revenue risk.” We have been more bearish on earnings and That’s really the difference, “said Wilson. Morgan Stanley is currently” very defensively oriented, “said Wilson, and overweight in health care, tools and REITs.
