Morgan Stanley: “The Moment Of Truth For Stocks Is Here”

Monday, April 8, 2019
By Paul Martin

by Tyler Durden
ZeroHedge.com
Mon, 04/08/2019

It’s Monday, which means another dose of cold water is being poured over market euphoria, courtesy of the market’s latest, and according to many most accurate, bear Morgan Stanley’s chief equity strategist Michael Wilson.

One day after Wilson blasted FOMO-mania, warning that “it’s misguided to assume that the profits recession has magically ended, and I see an increasing chance that it turns into an economic one if companies decide they want to protect profits by cutting labor, capex and inventory”, the equity strategist has published a new note in which he warns that “with more than 100% of the rally in stocks this year coming from multiple expansion,” the “moment of truth” is coming with 1Q earnings results. And since we already know that Q1 earnings will be the worst in three years, it will be “more about guidance since S&P 500 1Q estimates are now very achievable, having fallen close to 10% over the past 9 months” with corporate margins the big wildcard according to Morgan Stanley.

First, when looking at the known unknowns, Wilson echoes what we reported a month ago, namely that this is expected to be the first quarter of negative year-over-year earnings growth since the 2015/16 earnings recession…

The Rest…HERE

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