Low macroeconomic data United State It indicates that earnings trends will weaken in the coming months, contrary to most analysts’ expectations, according to Michael Wilson Morgan StanleyPowerful guitarist Wall Street.
“Many of the key macroeconomic data we focus on have softened in recent weeks and do not point to a similarly strong rate of recovery in the months ahead.”Although his prediction of a stock crash in 2023 has not yet materialized, said Wilson, who ranked first in last year’s survey of institutional investors for correctly predicting the observed stock sell-off in 2022.
almost 86% of the S&P 500 components have reported results so far this quarter, and 79% of those companies have exceeded estimates, according to data compiled by Bloomberg Intelligence.
Wilson said that was due to strong economic numbers in January and February and lower expectations at the start of the season.
Wilson said the increase in results that analysts are expecting is dependent on improving margins. “We are more skeptical as labor costs continue to be a drag on businesses and our margin ratio points to additional margin multiples and a subsequent weak recovery in the coming months.”
Moreover, slowing inflation means that the pricing power of firms will diminish.
However, the strategist acknowledged that if economic data improves, an expected recovery in earnings could materialize, reducing the likelihood of a base case of $195, below consensus, for earnings per share in 2023.
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