Morgan Stanley (Morgan Stanley) US stock strategist Michael Wilson warned on Monday (25th) that US stocks are showing ominous signs, indicating that the S&P index is facing the risk of falling into a bear market.
Wilson believes that U.S. stocks are showing ominous signs, with defensive stocks falling alongside cyclical sectors on Thursday and Friday, and none of these sectors that have performed relatively well recently were spared.
With defensive stocks now expensive, with limited upside, and investors struggling to find a safe haven in the stock market, the S&P appears to be ready to join the bear market, with a 20% pullback from its January highs expected in the next month or so, Wilson noted. .
Wilson mentioned that it is not clear when the next stock rotation will occur, but as a rule of thumb, when this happens, it usually means that all sectors of the S&P are regarding to fall sharply, with few exceptions.
Wilson said that as the U.S. enters the end of the economic cycle, both U.S. GDP and corporate earnings growth will decelerate for the broader economy and markets, and the defensive attributes of pharma and biotech stocks will outweigh policy concerns and drive their performance. relatively higher.
Michael Howell, CEO of Crossborder Capital, sees a growing likelihood of a recession, with the stock market sell-off still 20% away, and bear market risks looming.
The Fed will shrink its balance sheet by regarding $9 trillion as soon as May and may raise interest rates sharply,Howell noted that typically, a Fed tightening cycle would cause the S&P to drop regarding 15%, 30% if the recession deepens, and 50% if there is a banking crisis.
Howell said that the financial system the market is facing is not the same as the financial system described in economics textbooks. It is not so much a new financial system as it is actually a refinancing system, with a global debt of regarding $300 trillion and an average maturity of regarding For 5 years, regarding $60 trillion in refinancing is required each year.
along withJapanese YenThe slump, higher U.S. Treasury yields and soaring commodity prices have seen a drop in liquidity. Increased volatility has made it more difficult for people to take out collateral, as lenders will need more margin, and Wall Street is regarding to enter a period of turbulent investing.
