Wall Street strategist advises "bear market rally" to share sales

Much uncertainty in the markets
Brenmarkt rally offers an opportunity to sell
Morgan Stanley recommends a defensive bias

A stock market rally describes a market situation in which stock prices first fall over an extended period of time and then there is a short-term, sharp recovery from the negative stock market. The market seems to be normalizing, but this upward trend can also be deceptive, because prices often collapse again after a brief recovery. Mike Wilson, Chief Investment Officer of the investment bank Morgan Stanley, considers the development that has been observed on the stock markets since mid-March to be just such a market rally.

Brenmarkt rally

According to Mike Wilson, the US economy is nearing the end of an expansionary phase, or growth cycle, which will soon be followed by a contraction. This is reported by the “New York Post”, citing a message from the investment strategist to customers of the bank. That’s why Wall Street’s recent surprise recovery may just have been the calm before the storm. Wilson spoke of “nothing more than a diabolical Brenmarktrally”.

Sell

In this situation, the expert advises investors to seize the opportunity to part with shares: “Even if it may not have ended completely, it is still a rally to sell,” Wilson is quoted as saying. The high volatility on the financial markets, the unstable geopolitical environment and increasing risks to growth and company results make him pessimistic.

He recommends a “defensive” strategy for investors who want to continue investing in stocks. The equities team at Morgan Stanley assumes that utility stocks, ie electricity, gas and water supply companies, will be among the outperformers in the future.

Lots of uncertainty

This cautious approach is due to the great uncertainty currently prevailing in the market. For one thing, Russian President Vladimir Putin is in the process of destroying a decades-old peace order with his invasion of Ukraine. On the other hand, inflation continues to skyrocket, although the US Federal Reserve has announced and already initiated a tighter monetary policy.

Given these heightened uncertainties, European Morgan Stanley analysts have already lowered their outlook for the S&P 500 index, which tracks the broad US stock market. While they originally expected the index to rise by 10 percent, they now only expect the index to rise by just 3 percent this year.

Editorial office finanzen.net

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