Megan Henney — Fox Business Feb 21, 2023
U.S. stocks have climbed to unsustainable highs and face imminent losses once investors realize there will be no Federal Reserve pivot later this year, according to Morgan Stanley strategists.
Michael Wilson, the chief U.S. equity strategist at Morgan Stanley and a longtime Wall Street bear, warned in an analyst note this week that the stock market has entered a level known as the “death zone” – the name used in mountaineering to describe an altitude so high that climbers do not have enough oxygen to breathe.
“Many fatalities in high-altitude mountaineering have been caused by the death zone, either directly through loss of vital functions or indirectly by wrong decisions made under stress or physical weakening that lead to accidents,” Wilson wrote. “This is a perfect analogy for where equity investors find themselves today, and quite frankly, where they’ve been many times over the past decade.”
He suggested the S&P 500 could tumble to 3,000 points within months, down about 26% from current levels.
“It’s time to head back to base camp before the next guide down in earnings,” Wilson wrote.
The gloomy forecast comes after a brutal year for the stock market, its worst since the 2008 financial crisis. All three indexes tumbled in 2022, snapping a three-year win streak. The Dow Jones Industrial Average ended the year down 8.8%, the best of the three. The S&P 500 sank 19.4% while the tech-heavy Nasdaq Composite plunged 33.1%.
Stocks initially rallied in early 2023, although equities have lost some of that momentum amid rate-hike fears. As of Tuesday afternoon, the S&P is up about 4.5% from the start of the year but down about 3.55% from the previous week.
Wilson is not alone in his bearish outlook. Bank of America chief economist Michael Hartnett last week predicted that a “no landing” scenario in the first half of the year – where there is no immediate slowdown in growth but inflation remains above trend – could clobber stocks, sending the S&P down another 7%.
And JPMorgan strategist Mislav Matejka argued in a note this week that equities will not hit bottom until the Federal Reserve concludes its aggressive interest-rate hike campaign and starts cutting.
Federal Reserve policymakers already voted to raise interest rates eight consecutive times to a range of 4.5% to 4.75%, and they signaled last month that a “couple more” increases are on the table this year.
But a slew of hotter-than-expected economic data reports, including the blowout January jobs report and a disappointing inflation report that pointed to the pervasiveness of high consumer prices, has raised the specter of a higher peak rate.
I think stock prices are so ridiculously high because up to now they are what absorbs and thus hides the hyperinflation that all that money creation can only lead to. It was said recently that 80% of the dollars in circulation were created in the previous two years. That’s unsustainable, but the US thinks it’s different this time, like it can’t blow up in their faces. But when inflation there breaks out of its high-end containment such as stock prices, mansions, jewellery, art, executive toys like yachts and supercars, and executive pay and bonuses in the multi-millions, then inflation will burst out of Wall Street to flood Main Street, and the Weimar-like collapse of the economy will prove to America it was just another unexceptional nation.
Further to my earlier comment.
Nazi leader in waiting with the right quiff for a WW2 German uniform, says this:
Keir Starmer warns Brits will soon be worse off than people in Poland, unless the UK’s ‘low wage, high tax, doom-loop’ is broken as the Labour leader tackles the Tories over their economic record.’
For how many years before and after Brexit, was I saying, that bankrupt Britain will be poorer than Portugal. Okay, Starmer has his geography issues.
For more months than I care to remember, the fake news presstitutes have asking, or should I say, demanding, that Sunak fix the broken economy. He’s done sweet feck all. But it is reminiscent of the Sturgeon & Boris Covid Show. Now we have the Starmer & Sunak Nazi Show.
Now for the constitutional problem. How can Charlie take an oath to defend his sheepl, when he’s affiliated to the WEF? He’s not only a very thicko King, but he ain’t even fit for the role.
Here we go again. Anyone interested in purchasing a shipload to tulip bulbs? Larry Fink thinks it’s a good deal!
kill your rulers !