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Stock market crash warnings grow for 2023 - Morgan Stanley

Stock Markets Nov 30, 2022 22:48
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By Laura Sánchez

Investing.com - The outlook for recession in developed countries continues to give the experts fuel for their pessimistic predictions for next year, also in the financial markets.

As we explained yesterday, Deutsche Bank forecasts recession in the United States next year and estimates that markets could fall by up to 25%.

In fact, as Alba Puerro, trader and co-founder of SalaParaTraders, notes, "the U.S. Federal Reserve (Fed) points to the highest odds of a recession in the next 12 months at 45% (the highest on record)."

"If the Fed sees a 45% chance of a recession, the probability is clearly much higher," adds the analyst.

Meanwhile, Mike Wilson, chief U.S. equity strategist and chief investment officer at Morgan Stanley, also predicts that stocks will suffer a double-digit decline by early 2023.

Wilson, whose target for next year at S&P 500 is 3,900 points, warns that U.S. companies are preparing to unleash downward earnings revisions that will hit stocks.

"It's the path. I mean nobody cares about what’s going to happen in 12 months. They need to deal with the next three to six months," Wilson told CNBC yesterday, Tuesday. "That's where we actually think there's significant downside. So, while 3,900 sounds like a really boring six months. No... it's going to be a wild ride," warns the expert.

Thus, the S&P 500 could fall as much as 24% between now and early 2023.

"The bear market is not over," Wilson notes. "We've got significantly lower lows if our earnings forecast is correct," he concludes.

Despite this scenario for next year, Wilson believes that "[t]his is not a time to sell everything," as he still expects some bullish moves to boost stocks over the next few weeks.

Stock market crash warnings grow for 2023 - Morgan Stanley
 

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