Meet Kevin: Morgan Stanley’s HUGE Warning
Every year brings out several predictions about how various assets will perform. Depending on conditions, institutions may gravitate toward a similar view. These overall consensus estimates are only useful to gauge sentiment. That’s because the final results are often wrong.
Following last year’s market selloff, however, analysts have the most mixed view of how stocks will perform in decades. Some see a recovery higher by year-end. Others see the market flatlining. And a few analysts see a further drop ahead.
Morgan Stanley (MS) sees the potential for stocks to drop another 23 percent this year. That indicates that we’re only about halfway through a bear market.
That view is based on the fact that the Fed is committed to fighting inflation. That means interest rates will trend higher for longer. And it’s based on the view that a mild recession is likely in 2023. If that’s the case, stocks likely won’t start to rally anytime soon.
While there is some good news out there, like declining inflation, it may not be enough. That’s because corporate profitability has dropped. With lower profit margins and growth come lower prices in the stock market.
The consensus view is that the first half of the year will be challenging for markets. That’s likely true. But the second half of the year may not see a steep recovery, and investors should be prepared.