My second favourite Wall Street bear is still making so much sense. Michael Wilson at Morgan Stanley. P and E both still too high.
As the evidence builds around our more bearish earnings outlook, the stock market has traded lower again. While w think there is still a long way to go before reality is fairly priced, investors may face a volatile path in the absence of an “event” to clear the decks.
The evidence is building…Since our earnings downgrade two weeks ago, stocks have traded poorly due to further evidence that inflation will keep the Fed and other central banks hawkish, while companies are beginning to acknowledge that headwinds to earnings are building. Whether it’s demand destruction, margin pressure, or both, we continue to think earnings forecasts are too high, particularly for 2023.
