Source: Fortune
Summary
Morgan Stanley’s Mike Wilson argues that half of the stock market is already in a bear market, with 50% of Russell 3000 stocks down at least 20% from their 52-week highs. He believes the current correction has been grinding for six months and is closer to the end than the beginning. Wilson’s analysis assumes the Iran conflict stays contained and oil stays below $100 a barrel. However, if crude breaks and holds above $100, the dynamic shifts from a “correction in a bull market” to something more serious.
Our Reading
The numbers tell one story. Wilson’s track record on calling inflection points is impressive, having correctly identified the “rolling recession” and its trough. He now argues that the current turbulence is a “correction within a bull market” rather than a new downturn. The damage has already been done, with software and services stocks being the hardest hit. But what if the war just keeps on going? That’s the question mark hanging over Wilson’s analysis.
Author: Evan Null
