Finally, a Wall Street strategist that is making perfect sense. Michael Wilson at Morgan Stanley:
The market appears ready to take on a more defensive character as we experience a meaningful deceleration in earnings and economic growth. Inventory builds are unlikely to offset if order books prove to be inflated as we suspect.
Our mid-cycle transition narrative has been playing out nicely since mid-March, with small caps and lower-quality stocks underperforming consistently. Quality can mean a lot of things and for many it simply means large cap growth win. While many of these stocks fit the high-quality bill, we think the quality rotation will now begin to favor more defensive properties like earnings stability rather than growth.
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