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00:00You think we're underplaying the cyclical story embedded in some of these big tech names. Yeah we do. John I mean you know are fire and ice. Narrative is I think playing out. And while I agree with Laurie that there's evidence to consumers hanging in for now. I mean the market is worried about something because it's really historic. How defensives the market is trading. Okay. So while the S & P 500 is only down what 6 7 percent which is pretty amazing in the face of the ray. I would. I wouldn't have brain I would not take comfort in that because the real signal underneath the surface is a market that is really shuttering about something whether it's the war in Ukraine the Fed itself. You know we know about that force. And then maybe there is a growth slowdown. But the market is starting to contemplate. We don't have evidence of that hard evidence yet that earnings are going to have to come down. But we do think the signal from the market's pretty clear now that good news on that is that the market sort of Kreisberg. Right. So if you have a different view if you have a view that things are going to re accelerate here or stay strong then you should be rotating into the more technical parts of the market. That's not you. But you know the market is speaking loudly. So we think it is saying that we have a cyclical slowdown here in last night's results you know kind of portray our view which has been all along that there's a giant payback in demand not only for the obvious winners of Covid pandemic but I mean technology broadly. It is a cyclical group. It is a cyclical industry. And this has been a building sort of view that it's secular and it's not cyclical. And that's just from my view us sideways. Inflation has been a tailwind for revenue growth over the last year or so and it starts to become much more prominent headwind for earnings. Are we going to see that this quarter in these earnings. I think we'll see some evidence of that. John for sure. And we've already heard about it from some companies. I mean clearly you know the spike in inflation from the war on food and energy specifically is going to be like a tax on the consumer. I do think that will have an impact going forward with whether or not has an impact in the first quarter. And but yeah the inflationary tailwind which has been just a straight through pass through to the top line which by the way that's why we had inflation. Right is Covid. They'll pass it straight through. Now we're seeing the latent effects on costs and that pricing power may not be as strong to pass as straight through. And we should start to see that margin pressure once again. So the good news is that margin forecasts have come down over the last two or three months in line with the last quarter fourth quarter with 14 percent net margins. The forecast now for Q1 is twelve and a half four point six to be exact. And we think that will persist in the rest of the year. So the risk is that those margin numbers have to come back for the rest of the year now. And we're all a little bit about that during earnings season. We think they will.

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Morgan Stanley's Wilson Sees Signs of Cyclical Slowdown

Mike Wilson, Morgan Stanley's chief U.S. equity strategist and CIO, says the equity market is "shuddering about something" and expects margins to come down for the rest of the year. He speaks with Jonathan Ferro on "Bloomberg The Open." (Source: Bloomberg)

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