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Mike Wilson, Morgan Stanley’s chief U.S. equity strategist and investment officer, told Bloomberg Markets on Wednesday that U.S. equity investors should be prepared for more pain, with indexes yet to hit their low for the year.
While he stated that June was probably the low for the average stock, he feels the direction for indices is down “for at least next quarter or two.”
He added that the market is being “too optimistic” about the outlook for earnings, and trends in operating margins were worse than feared and it will continue. Wilson said Morgan Stanley doesn’t believe it is just a one-quarter affair.
Commenting on the Fed and its actions, Wilson stated it will always be late by design as it relies on labor market data and inflation, two backward-looking data points.
“By the time the labor market falls apart, it’s too late,” Wilson was quoted by Bloomberg as saying. He added that investors are too distracted by the Fed.
