Morgan Stanley’s Wilson Says Fed Pivot Won’t End Profit Pain
- Falling global money supply supports Fed pivot view: Wilson
- But dovish Fed won’t change trajectory for earnings estimates
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Michael J. Wilson, one of Wall Street’s biggest equity bears, says that while the Federal Reserve’s dovish pivot is becoming more likely amid falling money supply, this doesn’t remove the risk of a sharp contraction in earnings.
The tightening of liquidity in the global financial system is entering a “danger zone” where economic accidents tend to happen, increasing the chances of the Fed restarting quantitative easing, Morgan Stanley strategist wrote in a note on Sunday. This could lead to a recovery in stocks, he said, but this doesn’t change Morgan Stanley’s concern about the outlook for earnings.