The earnings recession is still coming, and it’s going to be worse than anyone thinks, Morgan Stanley said in a new note to clients on Monday.
The firm sees a “meaningful” earnings recession this year, with earnings declining 16% by the end of the year before experiencing a “sharp rebound” in 2024.
“This out-of-consensus earnings path is supported by our models and our view that policy will become more accommodative in 2024, not 2023,” Morgan Stanley chief investment officer Michael Wilson wrote. “It’s also supported by our thesis that we are in the midst of several ‘hotter but shorter’ earnings cycles in the context of a broader secular bull market (a ‘boom/bust/boom’ regime).”
Read More : Morgan Stanley Warns of Impending Earnings Recession, Cautions Stock Market Unpreparedness