2023-06-20 12:02:00
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Investing.com – He is one of Wall Street’s most prominent bears. Mike Wilson, chief strategist at Morgan Stanley (NYSE:) in the United States, warns that, “because we got the earnings so wrong this year, we tried to figure out if our earnings model was misleading us. “.
Mr. Wilson asks this question in remarks echoed by MarketWatchas he examines the main concerns facing the US stock market.
For now, however, it seems clear: “Real earnings have followed our pattern perfectly over the past year, which means that the system seems to be working well even in this regime of higher inflation, which was on our minds a year ago,” says Wilson.
Weaker-than-expected stock data released last week, buoyed by the market, portends a sharp drop in earnings over the next four months, said Mr. Snatley, a strategist at Morgan. “Such a decline in revenue growth would imply that our much lower earnings forecast is correct, as it is negative operating leverage that does the heavy lifting,” he warns.
Wilson is also skeptical of the recent market rebound in tech mega-caps.
With regard to central banks, Mr. Wilson explains that “the Fed does not buy bonds, but temporarily lends money to the banks, adds liquidity to the system and allows the banks to continue to operate and grant credits”.
This cash will evaporate, he warns. “Historically, the equity market hasn’t done well when there’s such a reduction in bank reserves. Combined with the fiscal drag, it should be a tough cocktail for equity investors,” Mr. Wilson.
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