BlockBeats News, March 18th, Morgan Stanley’s Chief US Equity Strategist Michael Wilson released a report proposing a contrarian view to the current market panic, suggesting that the current sharp correction has matured in both time and space, indicating that the market is close to a bottom rather than the beginning of a downturn.
Data shows that 50% of stocks in the Russell 3000 Index have dropped more than 20% from their 52-week highs, with a similar proportion in the S&P 500 Index exceeding 40%, indicating that half of the stocks are already in a bear market, underestimating the breadth of the internal damage.
Wilson believes that this round of sell-off is a “pullback in a bull market,” starting from the liquidity tightening last fall, long before the recent escalation of geopolitical conflicts. Surrender-type selling in the current market often signals an end rather than a beginning.
Unlike past economic recessions accompanied by deteriorating earnings, the current S&P 500 earnings are growing at a rate of 13% and continuing to accelerate. Wilson’s view is based on two major assumptions: that the Iran conflict remains controlled and that oil prices stay below $100 per barrel. If oil prices were to spike above and stabilize above $100, the market could transition from a pullback to a more severe crisis.
