With the trading winter officially here, Wilson pointed out that there has been so much damage done to many stocks, and based on this, investors will act wisely if they “hunker down for a few more months.”
The United States stock market has been on a freefall since the beginning of the year and Michael Wilson, a strategist from American investment banking giant Morgan Stanley (NYSE: MS) believes the slump is evidence that “Winter is Here” for the market.
Being a known market bear, Wilson has long been a critic of the sporadic growth many stocks in the US have printed in the past few years, and he says the January bust in growth “fits nicely” with his popular fire and ice narrative as reported by Bloomberg. Based on this bearish narrative, the market is arguably poised to experience further plunges amid declining growth and stiffer monetary policies.
According to Wilson, everyone’s attention is bound to shift from the much anticipated Federal Reserve tightening policy that is imminent to the slowing economic growth across the board.
“We have been monitoring PMIs [purchasing manager indices] and earnings revisions breadth for signs the slowdown is bottoming, but it has quite a bit further to go, in our view, and equity markets are not yet priced for it,” Wilson said. “It’s too early to get bullish.”
With the trading winter officially here, Wilson pointed out that there has been so much damage done to many stocks, and based on this, investors will act wisely if they “hunker down for a few more months.”
Chairman Jerome Powell has a lot of backing from political oligarchs to tighten the economy as necessary in the face of rising inflation. With this prompt, there is a general consensus that the Feds will raise interest rates at least 4 times this year beginning in March. Some strategists even believe that the Federal Open Market Committee (FOMC) will continually act until there are significant changes in the inflation record in the country.
“The Fed is serious about fighting inflation, and it’s unlikely that it will be turning dovish anytime soon given the seriousness of these economic threats and the political support to take action,” he said.
Morgan Stanley Stance and the Crypto Reflection
The position that winter is here for stocks as postulated by the Morgan Stanley strategist has also been corroborated by analysts from UBS Group AG (SWX: UBSG) who say the current slump being experienced in the digital currency industry is indicative of a “Crypto Winter.”
A crypto winter is an extended period of bearish price volatility, characterized by the suppression of Bitcoin (BTC), and other altcoins. While the volatility inherent in the cryptocurrency ecosystem is a well-known factor that can make or mar investors’ capital, the current dip is unprecedented, seeing the industry has welcomed a lot of corporate investors in the past year.
The acquisition of BTC by MicroStrategy Incorporated (NASDAQ: MSTR), Block Inc (NYSE: SQ), and El Salvador, a sovereign nation, is expected to keep the prices of digital assets relatively stable, however, the reverse is currently the case. Both the stock market and the crypto ecosystem are obviously correlated in no small measure, and there is a general expectation that an end to the winter occurrence in one will help lift up that of the other.
next