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Mike’s Back: Analyst Who Predicted Tech ‘Rain Storm’ Releases 2019 U.S. Equity Outlook
Listen up: Morgan Stanley's Mike Wilson isn't done with you people yet.
Few took Mike seriously back on July 8 when, in a short Sunday evening client note, he called for "a proper rain storm" in the market's richest "zip code".
By "zip code", Wilson meant Tech and Growth which he called "over-loved and over-owned."
About three weeks later, a little rain did in fact come calling in the form a sudden lurch lower in FANG following Facebook’s Q2 fumble. After releasing a couple of additional n
wow, “bear case” of -8% !! omg! but given its generally verboten to even give a nod to the bear, I guess this is dramatic.
notice how EPS is 8.7% no matter what? and a bear forward p/e is 15x vs 15.5 for base case. imagine if p/e (the measure of aggregate optimism/pessimism) fell to 14 (omg!) and earnings were only 4% growth. we might be tempting a -correction-.
2019 will have v large downswings and upswings as the bear gets underway…..low single digit eps growth, one quarter of negative US gdp, and falling short term tsy yeilds. the bull is over, and I’ll go even further out and state that there is a high likelihood that this bear mkt will see the sp500 lose 75% of its value….of course overshooting to the downside on fundamentals. there are very few long term market theories out there…most subscribe to ‘stocks go up about 7% per year over the long term’. kondratieff, elliott wave are two that are primed to see major declines, throw in boomers net selling and millenials lack of discretionary income to replace the boomers, and you have a very volatile mix.