US equity investors are in for disappointment as economic growth is set to be weaker than expected this year, according to Morgan Stanley’s staunch bear, Michael Wilson.
The strategist’s warning contrasts with the rally on Wall Street, driven by expectations the economy can withstand the Federal Reserve’s hiking campaign, which is seen as peaking soon. Tech stocks have outperformed on the excitement around developments in artificial intelligence.
“At current prices, markets are now expecting a meaningful re-acceleration in growth that we think is unlikely this year, especially for the consumer,” Wilson wrote in a note on Tuesday. “Potentially softer September and October data is not priced into many stocks and expectations.”
Last month, Wilson — whose negative outlook on stocks hasn’t materialized yet this year — said the “risk-off complexion” of markets will last through fall and potentially winter. Some other strategists echo his bearish view, like Bank of America Corp.’s Michael Hartnett, who said US stocks still face a pullback from the risk of a hard economic landing. JPMorgan Chase & Co.’s Mislav Matejka said there is complacency in US stock sentiment, warning that there is no more safety net to cushion equities.
In the Tuesday note, Wilson said breadth remains weak for the S&P 500 and Nasdaq Composite, referring to the number of stocks contributing to the rally, and the gains are not spreading. He also pointed to weakening personal consumption expenditure as a reason his team remains skeptical that economic growth is accelerating.
“The bottom line is that at this stage in the cycle, the economic data can be conflicting and uncertain for both the bulls and bears,” Wilson said. “During such periods, price action tends to influence sentiment and positioning more than normal.”
Eric J. Stone was fired by Fidelity in 2021 after facing claims he took loans from clients.
Chicago-based Curi Capital gets new majority owner as $14 billion RIA eyes acquisitions and expanded family office services
Partnership pairs organic lead detection with paid ad targeting to help end "spray-and-pray" marketing for growth-seeking advisory firms.
Jonathan Lewis joins the wealth management giant as it proceeds with a $2 billion AI and technology push for advisors.
Once focused on retirees, pre-retirees and risk-conscious investors, the category has widened into a wider toolkit to help reassure clients in choppy markets.
Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains
Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income
