The Tell: One of Wall Street’s biggest bears admits ‘we were wrong’ about 2023 stock-market rally, but refuses to throw in the towel

by | Jul 25, 2023 | Stock Market

A lot can change in a year — just ask Morgan Stanley’s Mike Wilson. As recently as last fall, Wilson, Morgan Stanley’s top U.S. equity strategist, was riding a wave of vindication after successfully anticipating last year’s inflation-induced market carnage, which sent both U.S. stocks and bonds sliding lower. He was one of only a handful of Wall Street analysts to pull this off.

Now, the Morgan Stanley strategist is issuing a mea culpa, admitting in a note to clients — who at times have quibbled with his bearish views — that “we were wrong” about the degree to which waning inflation and the artificial-intelligence boom would boost markets in 2023. “Last October, we based our tactically bullish call on the view that inflation was peaking along with back-end rates and the US dollar. However, the upside move in equity multiples on the back of this theme (and the others discussed above) has gone further and persisted longer than we anticipated—i.e., we were wrong,” Wilson said in a note to clients dated Monday. So far, Wilson and his team have remained steadfast that stubborn inflation, declining corporate earnings and the March U.S. banking crisis would eventually undermine the rally …

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