Per CNBC
Morgan Stanley's Chief Investment Officer shares his far-from-optimistic predictions on stock performances. Though hard to swallow, Mike Wilson says the market should prepare for up to a 24% drop in the S&P for 2023.
While offering the firm's S&P 500 2023's price targets for a bearish, base, and bull case, Wilson also noted that the market should expect the S&P to range between 3,000 and 3,300 in the first four months of 2023.
Morgan Stanley's 2023 S&P price targets are as follows:
- Bear Case - 3,600
- Base Case - 3,900
- Bull Case - 4,200
Wilson also clarified that his year-end target is 3,900, which is safe to say since the S&P 500 closed at 3,957.63 on Tuesday. On Oct 13, the S&P reached 3,491.58, a record 52-week low that Wilson called in July, saying the June low wasn't the final downward move.
He also clarified that Morgan Stanley's bear case is 3,600 for 2023 but their "bare case path is 3,000," believing that the index would first drop significantly before reaching their targets.
Despite his views on the market, Wilson doesn't think it is the right time to sell everything saying, "I still think this tactical rally has legs into year-end." He also said they have "significantly lower lows if our earnings forecast is correct."
Wilson described the next six months as a "wild ride," saying the average stock is doing better than the index and that new stock opportunities could emerge compared to just trading the index.
A few weeks earlier, when asked by Sonali Basak why he had the lowest estimate for the S&P index in 2022, Wilson replied that their year-ahead lookout was around the fire and ice narrative. He equated inflation to fire and said that the Feds and central banks would need to tighten policy in an already slowing-down economy describing the combination as "pretty toxic," per Bloomberg.
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