Morgan Stanley's chief equity strategist recommends buying shares for the next 6-12 months
Morgan Stanley's chief equity strategist, Michael Wilson, known as the Wall Street Chief Bear, has suddenly changed his mind and now recommends buying in anticipation of a 3250-point rise in the S&P 500 over the next 6-12 months.
Further the expert singles out four arguments to substantiate the forecast of the stock market growth in the medium term.
1. March lows in the stock market were formed due to the forced closing of long positions by investors who used leverage. Now these players have sold everything and are sitting on the money, which makes a new large-scale long positions liquidation extremely unlikely.
2. Credit markets have stabilized thanks to the unprecedented support from the Fed and other central banks. Given the experience of the last 10 years, we have no doubt in their determination to do everything necessary. Most of the investors we talked to intend to buy the same securities as the FRS. At the same time, the situation has also improved in the market of high-yield bonds, which the regulator does not plan to buy.
3. In the next month, macroeconomic statistics and corporate reports will be weak, but the stock market has probably already taken all this into account in prices. However, it should be remembered here that the possible full-scale financial crisis like in 2008-2009 is not taken into account in prices.
4. We have had hundreds of conversations with clients in recent weeks, and all of them are absolutely convinced that the stock market will break recent lows in the next month or two. That doesn't mean the "crowd" can't be right at all, but we do recall that last year the S&P 500 soared 1,000 points without testing the December 2018 low.