Morgan Stanley Strategist Says Bank Stress Signals Bear Market End
- Earnings estimates will drop amid falling growth expectations
- S&P 500 remains unattractive and credit crunch risks rising
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Morgan Stanley’s Michael Wilson said the stress in the banking system marks what’s likely to be the beginning of a painful and “vicious” end to the bear market in US stocks.
“With the back-stopping of bank deposits by the Fed/FDIC, many equity investors are asking if this is another form of QE and therefore ‘risk on’,” the strategist — who correctly predicted the selloff in stocks last year and rebound in October — wrote in a note. “We argue it’s not, and instead represents the beginning of the end of the bear market as falling credit availability squeezes growth out of the economy.”