A Morgan Stanley strategist expects stocks to take their largest annual nosedive since the Great Recession, Bloomberg reported Monday.
Strategist Michael Wilson said in a research note that "corporate profit estimates are still too high," while "the equity risk premium is at its lowest since the run-up to 2008." The S&P 500, Wilson said, could plummet 22 percent—much lower than "the market is currently estimating in the event of a mild recession."
The Bloomberg report came on the same day that news broke of Goldman Sachs cutting over 3,000 jobs—the largest number of layoffs "since the 2008 financial crisis," Reuters reported. Economists widely predict a recession this year, the Washington Free Beacon reported, with Bloomberg's financial experts saying in October that the odds of a downturn are 100 percent. A majority of voters, meanwhile, say the economy will get even worse in 2023, a poll found last month.
President Joe Biden, however, has pooh-poohed recession concerns, saying before last November's midterm elections that "our economy is strong as hell." The economy last year already had two consecutive quarters of GDP drops, the traditional definition of a recession.
Inflation under Biden is "driving Wilson's bearish view," Bloomberg found. Biden's so-called Inflation Reduction Act will have little to no effect on inflation, the Free Beacon has reported, while his possibly unconstitutional student debt cancellation will almost certainly increase deficit spending.