Last week, Mike Wilson, a big bear in US stocks and chief strategist at Morgan Stanley, warned that the fundamentals of the next rally may not come, weak earnings and economic activity could affect the stock market, and US stocks are entering the final stages of a bear market and urged investors to sell.

In the most recent week, however, US stocks have not performed as badly as WIlson predicted. Tony Pasquariello, head of Goldman Sachs Group's hedge fund, even believes that falling inflation in the US and the resilience of the labour market suggest the possibility of a soft landing, while rising expectations of avoiding a recession in Europe superimpose the recovery of the Chinese economy, which will eventually push the S & P 500 above 4300.

But Morgan Stanley bears still stick to their views in their latest report on Monday:U. S. stocks fell just late, not too late.

Although he admitted, "based on last week's price movements, it is difficult to come to the conclusion that a slump is coming." But Wilson believesAs long as the time scale is slightly lengthened, the market will prove him right.

Wilson said that judging from the performance of US stocks last week, the market does not care about fundamentals and continues to digest the bear market that fell too far in 2022, especially technology stocks, with many stocks rising sharply despite poor performance.

Wilson believes that this situation is not sustainable:

"while we respect market price movements as much as everyone else, it is worth noting that we have experienced the same situation in previous quarters: the stock market rose on bad news, but fell again when the bad news kept coming."

Wilson further pointed out that historically, the decline in stock prices has mostly occurred after expected earnings per share growth is negative. In addition, our future earnings forecast path means that earnings growth will further decelerate significantly. Wilson thinksAt present, the decline in earnings has not been reflected in the stock price.:

The forward growth rate of the S & P 500's earnings per share just fell to negative last week. This has happened only four times in the past 23 years (2001, 2008, 2015, 2020), and each time earnings shift from positive growth to negative growth, it leads to a fall in the stock market. "

In addition, he reiterated that do not fight against the Fed, betting on a stock market rally at the moment is doomed to be futile:

"We find that many people are using stock market movements to draw the wrong conclusions about the Fed's policy and the severity of the continuing earnings recession. Although it will take some time for our views to be reflected in the market trend, we do not think the conclusion will be any different from our previous thinking. In addition to expected earnings per share growth, which just turned negative on Friday, the dollar and interest rates are also key variables that determine how long the stock market can support. "