“It feels like that moment is upon us,” Morgan Stanley’s Mike Wilson wrote earlier this week.

He could’ve been talking about a lot of things. For example, he might’ve been referring to the “moment” the US financial sector plunges into a second crisis in the space of 15 years. And he was talking about that, albeit in an indirect way.

Last month, Wilson channeled Jon Krakauer in warning that equities were surviving in the “death zone” (where that meant a very low ERP) thanks to “supplemental oxygen” (where that meant excess liquidity).

His contention was (and still is) that the ERP “can’t live” at currently depressed levels for long. Eventually, he insisted, threats to earnings will manifest in a deeper profit contraction as corporate America’s pricing power runs out while costs remain elevated. As he put it this week, recapitulating, “the true earnings picture” will likely “become more obvious” in the months ahead, at which point the risk to equities still trading at relatively high multiples will be impossible to ignore.

Needless to say, recent events only served to harden his conviction. Indeed, last week’s rollercoaster — which began with the market seizing on Jerome Powell’s hawkish prepared remarks to the Senate and ended with banks seizing up and failing — triggered a correction in the ERP, which Wilson suspects has a long way to go.

“Last week, the ERP rose sharply as PEs fell in the context of falling rates in a flight to safety,” he said, on the way to suggesting “this could mark the beginning of a much sharper move.”

As the annotations in the chart show, resets in the ERP can be dramatic, and Morgan Stanley’s US equities team fears this one might ultimately push the PE ratio as low as 13x. If you apply that to any bearish outlook for aggregate index-level EPS, you won’t like the number that comes out.

“Generally, such moves happen at the end as the moment of recognition can no longer be denied,” Wilson declared, in a dramatic flourish. “It feels like that moment is upon us.”