For Morgan Stanley, the current financial crisis that the exchange market is experiencing would indicate the end of the bear market on Wall Street. This is clear from the statements of Michael Wilson, strategist for the rating agency, who pointed out that the tension that is being experienced in the banking system marks what is probably the beginning of the end of the bearish financial market.
For Morgan Stanley, the current financial crisis that the banking sector is experiencing would indicate the end of the bear market on Wall Street. This is clear from the statements of michael wilsonstrategist of the rating agency, who pointed out that the strain that is living in Bank System mark what is probably the beginning of the end of financial bear market.
“With the support of bank deposits by the Fed, many equity investors are wondering if this is another form of QE and therefore ‘taking a chance’. We argue that it is not, and instead represents the beginning of the end of the bear market, as the fall in the availability of credit eliminates the growth of the economy“He has written in a report collected by ‘Bloomberg’.
The US Federal Reserve and Treasury came out to support deposits after the fall Silicon Valley Bank, Signature Bank and Silvergate. The Treasury said it would protect the deposits of bank customers, even those not originally backed by more than $250,000. In parallel, the Fed announced that they will make additional financing available to ensure that banks can meet the demands of their customers.
For Wilson, the S&P 500 will remain unattractive until the stock risk premium rises to 400 basis points from the current level of 230.
“The last part of the bear can be vicious and highly correlated. Prices fall sharply through an increase in equity risk premium which is very difficult to prevent or defend in one’s portfolio,” she stressed.
He collapse of Silicon Valley Bank, Signature Bank and Silvergateattached to the purchase of Credit Suisse by UBShas raised fears among investors that it could unleash a global financial crisishe.
“The events of the past week mean that the availability of credit is declining for a wide swath of the economy, which may be the catalyst that finally convinces market participants that earnings estimates are too high“, stressed that Wilson, who also estimates that the risk of a credit crunch has increased materially.
The Morgan Stanley strategist, who has advised investors to keep in mind that companies will lower their earnings guidance for the coming quarters, recommends positioning in defensive sectors and stocks and has warned that mega-cap tech stocks are immune to growth concerns.
In the long run, Wilson estimates that the projection for US stocks is positivebut that the markets will continue experiencing a lot of volatility until the Federal Reserve (Fed) cuts interest rates.