Morgan Stanley’s investment chief says beware these 3 ‘summer surprises’ set to crush stocks
Mike Wilson, the chief investment officer and chief US equity strategist at Morgan Stanley, thinks stocks are in for a rough third quarter due to three specific headwinds.
He also calls for a 10% correction, and says stocks haven’t properly discounted looming danger.
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It’s important not to let the summer heat get to you.
When the temperature in the marketplace rises, lack of proper preparation, analysis, and composure can turn would-be temporary pain into permanent losses. And although stock market dips, corrections, and crashes will continue to occur, the right strategy can be the difference between losing a grain of sand or the whole beach.
Mike Wilson, the chief investment officer and chief US equity strategist at Morgan Stanley, thinks investors may be missing three crucial summer market surprises — and he’s not waiting to sound the alarm on the danger ahead.
He spoke on a recent podcast and laid out the three negative surprises he thinks will transpire over the next three months:
1. The Federal Reserve
The Fed is going to cut interest rates at their July meeting — there’s no questioning it anymore.
However, although interest-rate cuts are generally perceived as favorable to investors, Wilson thinks they may be overlooking something: the cut coming too late.
“If the Fed is beginning a new full-blown rate cycle, equity markets typically respond negatively until the Fed can get ahead of the slowdown,” he said. “In other words, if the US economy is about to enter a recession, the initial Fed cuts are typically viewed poorly by stocks.”
Put simply, if the Fed isn’t in front of the curve, there will be more pain to come.
Wall Street is expecting a dismal second-quarter earnings season.
Currently, the S&P 500’s earnings are expected to fall 2% …read more
Source:: Business Insider