Morgan Stanley’s Mike Wilson warns about the stock market don’t let the ‘bear market mirror house’ fool you

An important week for earnings lies ahead, with the focus on updates from the tech space, which has already laid off thousands of workers.

Among those who didn’t expect good news in the earnings reporting system was Mike Wilson, Morgan Stanley’s director of US equity strategy, who was in our article. call of the day says that investors need to beware of the “bear market mirror.”

A pretty upbeat start to the year for stocks — S&P 500

has gained more than 3% this year and the Ark Innovation ETF is defeated

rose 17% – did not appeal to him. “Suffice it to say, we’re not interested in the recent recovery because our work and processes have convincingly reduced earnings,” Wilson said.

He noted that the early 2023 rally has been led by “low-quality and heavily sold stocks” and a sharp shift to cyclical rather than defensive. “In particular, this cyclical rotation is convincing investors that they are missing a bottom and must reposition,” he told clients in a note on Sunday.

But he cautions that bear markets can mislead a lot of investors before all is said and done, and that they must continue to trust their own process and ignore the noise. “The end of the bear market is always the hardest, and we were on high alert for such fakes, such as the October-December rally that we had,” Wilson said. predicted and traded”.

“After a challenging 2022, many investors are still fundamentally bearish, but question whether negative fundamentals have been priced into the stock,” he said. “Our view is unchanged as we expect the earnings path in the US to disappoint both current valuation and consensus expectations.”

One area that worries him is that the gap between the bank’s earnings outlook and future estimates is “unprecedentedly wide. The last two times our model was much below consensus, the S&P 500 fell 34% and 49%,” he said.

Morgan Stanley

What Wilson expects is an “imminent” earnings recession and subsequent erosion of margins. That will happen when costs grow faster than revenues and companies’ revenues unexpectedly slow, he said.

And while we’re not officially in a recession yet, the consequences for companies are already there — falling sales, bloated inventories and less productive employees. .

All that said, Wilson said that they “welcome the sentiment and positioning of the past few weeks as a necessary condition for the final phase of the bear market to take place.”

The chief equity strategist, who correctly predicted the direction of the 2022 stock market sell-off, warned earlier in the year that a recessionary shock this year could cause the market to drop another 22%. When it comes to Wall Street Predictions for this year’s S&P 500Wilson is on the lower side on expectations the index will end at 3,900.

US Treasury at ‘key point’: Stock, bond correlations change as fixed-income market warns of recession





higher, while treasury bonds


is also inching up, and the dollar

is the apartment. Much of Asia closed — Chinese markets will be closed for the entire week for the Lunar New Year holiday. Nikkei 225


topped $23,000 at the weekendlevels not seen since September despite Genesis Global Capital filing for Chapter 11 bankruptcy last week.

For more market updates plus possible trading ideas for stocks, options and cryptocurrencies, Sign up for MarketDiem by Investor’s Business Daily. And follow MarketWatch Live Blog for more market updates.


Evoquoa stock

up 17% after the water treatment company received a $7.5 billion offer from rival Xylem

shares fell 9.2%.

Get ready for some of the big tech names to report this week — Microsoft


and Texas Instruments on Tuesday, Tesla

and IBM

on Wednesday and Intel

on Thursday. GE

Johnson & Johnson


Boeing airplanes



letter V

and AmEx

will also report.

Genius Group, Singapore-based educational technology company with the stock is up 800% this yearset guidance for 2023, saying it sees 27% higher revenue than 2022 and 30% higher student numbers.

Read: Small-cap companies are chasing naked short sellers in increasing numbers: ‘That’s the biggest risk to mass market health today’

Earning tracking: Microsoft, Tesla and Intel are about to face skeptics

Spotify Technology

added to a wave of tech layoffs, with the music streaming company announcing plans to cut 6% of its workforce.

And: Big Tech layoffs aren’t as big as it seems

Top economic indicators will be available at 10am

Read: A recession is coming, economists say. Some even thought it was here

Ken Griffin’s US hedge fund, Citadel, made a record $16 billion last year (postage) last year, according to this estimate.

The best of the web

Almost rich enough to buy the White House. It’s a Biden’s incoming chief of staff, Jeffrey Zients

A 70% tax on the rich would even widen the inequality gap, Nobel Prize-winning economist Joseph Stiglitz said.

Free Lunch Pandemic is ending for many families, who still need them

Brazil and Argentina are said to be laying the groundwork for a common currency (requires registration)


“A staggering 40% of the companies on the Russell 2000 list were unprofitable last year. Callum Thomas, head of research at Top-down chartProvide the chart below from @MichealAArouet


“Throw in a possible global recession and things could go awry. It’s no surprise that fund managers are pulling out of the US stock market,” he said, pointing to this chart from Bank of America:

Bank of America/@Callum_Thomas


These are the most searched tokens on MarketWatch as of 6 a.m. Eastern time:


security name




Outdoor shower bed


game stop


genius group




Entertainment AMC


Mullen car






Preferred shares of AMC Entertainment Holdings

Random reading

“Mattress Mack” loses $2 million for Dallas Cowboys and That’s not even his biggest bet.

Japanese prime minister’s senior aide apologizes for putting hands in pockets during DC trip, after being scolded by mom.

sausage crime at the Australian Open

Need to Know starts early and is updated until the opening bell rings, but Register here to send it once to your email inbox. An emailed version will be delivered around 7:30 a.m. Eastern time.

Listen Best new ideas podcast about money with MarketWatch reporter Charles Passy and economist Stephanie Kelton.


News7F: Update the world's latest breaking news online of the day, breaking news, politics, society today, international mainstream news .Updated news 24/7: Entertainment, the World everyday world. Hot news, images, video clips that are updated quickly and reliably

Related Articles

Back to top button