Morgan Stanley’s chief US equity strategist, Michael Wilson, has predicted what’s known as an “earnings recession,” for 2019. The FT reports:
A string of disappointing forecasts from S&P 500 companies has led one of Wall Street’s leading market strategists to warn of a potential drop in earnings this year.
Michael Wilson, chief US equity strategist for Morgan Stanley, slashed his base-case estimate for 2019 earnings per share growth to 1 per cent, down from 4.3 per cent. By contrast, Wall Street’s consensus estimate calls for earnings to grow 5 per cent to $170 a share, according to FactSet.
“When we made our call for a greater than 50% chance of an earnings recession this year, we thought it might take a bit longer for the evidence to build. On the back of a large downward revisions cycle during 4Q earnings season, it’s becoming more clear,” Morgan Stanley analysts led by Mr Wilson wrote on Monday in a note titled Earnings Recession is Here.
An earnings recession is defined as two consecutive quarters of year-over-year declines.
Read more here.
Jeremy Jones, CFA
Latest posts by Jeremy Jones, CFA (see all)
- Is Sheltering in Munis a Safe Bet for Investors Bitten by SALT Caps? - September 13, 2019
- Ginnie Mae (GNMA) Bond Yields - September 12, 2019
- Is Apple Tipping the App Store Scales in its Own Favor? - September 11, 2019