Wall Street's Unloved Stock Rally Faces Earnings Wipe Out, Says Morgan Stanley.
Morgan Stanley's "Worried" Mike Wilson expects a significant earnings recession this year that has yet to be priced in by stock markets, despite the outperformance of AI players and some big tech names, Fed pivot fever, and hopes that the worst of an earnings recession is over. Wilson advises investors to stick to defensive characteristics, operational efficiency, and earnings stability. However, Morgan Stanley expects a 23% bounce in EPS growth in 2024 and 10% in 2025, as Fed policy turns more accommodative in 2024.