175, THE NASDAQ DOWN 135 S&P
500 LOWER BY 31 1/2, JOINING
ME RIGHT NOW MORGAN STANLEY
CHIEF U.S. EQUITY STRATEGY
CHIEF INVESTMENT OFFICER MIKE
WILSON GREAT TO SEE YOU HE
WELCOME BACK.
>> GREAT TO SEE YOU --
>> YOU ARE WELL-KNOWN FOR THIS
NEGATIVE STANCE YOU HAD ON
MARKETS NOW FORECASTING A
DOWNTURN PREDICTING S&P 500
WILL DROP MORE THAN 20%
WARNING OF EARNINGS RECESSION
ON THE MARKETS AS WELL AS ON
BANKING AS WELL, BECAUSE OF
THE BANKING TURMOIL WE’VE
SEEN, TELL ME HOW YOU WOULD
ASSESS EARNINGS PERIOD SO FAR,
YOU ARE BEARISH ABOUT IT TAKE
A LOOK AT EARNINGS PERIOD I
WANT YOUR TAKE EXPLAINING WHAT
IS GOING ON WITH MARKET, HOW
COME MARKETS ARE UP IF THINGS
ARE SO BAD YOU GOT NASDAQ UP
16% YEAR-TO-DATE.
>> THAT IS RIGHT, MARKETS ARE
ONLY HERE TO CONFUSE US
TORTURE SOMETIMES I FEEL IN
ONE OF THOSE PERIODS NOW WE
ARE PRETTY DEFINITIVE ABOUT
STILL IN A BEAR MARKET WE
THINK RALLY SINCE OCTOBER
IDENTIFIED IN OCTOBER RALLY
FROM 3500 TO 4150 GOT OFF
TRAIN IN DECEMBER WENT
SHOPPING AROUND
BACK-AND-FORTH.
SO, I THINK THERE IS SORT OF,
INDEXING WE MUST BE IN BULL
MARKET UNDER SURFACE WE HAVE
ONE OF THE WORST WE’VE EVER
SEEN VERY CHALLENGING, FOR
PEOPLE TO MAKE MONEY, THIS
YEAR INDICES UP MOST STOCKS
ARE NOT UP I THINK DELUSION
GOING ON IN TERMS WHAT HAVE
HAPPENED AS FAR AS CALL YOU
WILL TWO PART CALL BEARISH
2021 -- TO HAVE YOU RAISE
RATES, MORE THAN EXPECTED,
THEN WE SAY LOOK AFTER THAT
HAPPENS THERE IS GOING TO BE A
SLOWDOWN IN ECONOMY IN
EARNINGS, WE CALL THAT ICE WE
ARE IN THAT PART NOW THINGS
DEFINITELY SLOWING I THINK
MOST UNDERSTAND THAT
APPRECIATE THAT, TRYING TO
FIGURE OUT HOW MUCH WE ARE IN
DISCOUNT LAST FALL, 3500
DISCOUNT MORE 4, 200 NOT
DISCOUNTING MUCH IN TERMS OF
EARNINGS WE THINK IN FRONT OF
US FIRST CARTEL OF THIS
YEAR, WILL BE, A FULL-BLOWN
RECESSION IN TERMS OF THE WAY
WE THINK ABOUT IT
YEAR-OVER-YEAR GROWTH
NEGATIVE, 6, 7, 8%, NEGATIVE
FOR SURE, I THINK TRICK HERE
MARIA IS THAT SOME PEOPLE
THINK THE EARNINGS FORECAST
ARE EXPECTING A REBOUND INTO
SECOND HALF OF THE YEAR, SO
THAT MARKETS TRYING TO GET IN
FRONT OF THAT NORMALLY WE
WOULD AGREE WITH THAT VIEW, WE
DON’T BELIEVE EARNINGS
ESTIMATES WE ARE MORE
PESSIMISTIC FOR EARNINGS
SECOND HALF OF THE YEAR.
>> TALK ABOUT EARNINGS SO FAR
BECAUSE I KNOW THAT I ARE
EXPECTATIONS S&P 500, IS IN
THE LOW 3,000, AND WE ARE 4154
RIGHT NOW ON S&P YOUR LOOKING
FOR LOW 3,000, YOU ARE TALKING
ABOUT, TIGHTENING CREDIT, FROM
THE BANKS, YOU ARE TALKING
ABOUT, EARNINGS REVISIONS THAT
NEED TO HAPPEN, HOW WOULD YOU
CHARACTERIZE THE FIRST-QUARTER
EARNINGS SO FAR?
>> I KNOW JPMORGAN WAS SET
HIGH BAR BUT AFTER JPMORGAN.
>> IT IS EARLY BECAUSE BIG
BANKS OTHER COMPANIES, WE HAD
LAST NIGHT PROBABLY MORE
INDICATIVE OF WHAT WE
EXAMINE TO SEE PRETTY -- IN
LAST COUPLE DAYS TO ME ARE
WARNING SIGN A SLOWDOWN IS
BEING MORE BROAD, SMALL,
MEDIUM BUSINESS AREA WE THINK
IS THAT IS THE ECONOMY.
SO, LOOK THE BOTTOM LINE WE
EXPECT EARNINGS REVISIONS TO
CONTINUE TO COME DOWN PROBABLY
NEXT COUPLE QUARTERS AT SOME
POINT THE MARKET WILL FIGURE
THIS OUT AND AGREE, IF WE ARE
RIGHT WILL AGREE WITH OUR
VIEW, THAT EARNINGS ARE
MATERIALLY -- NOT 5% BUT MORE
15% PLUS, AND WILL PRICE IT
DON’T KNOW WHAT DEBT IS
EXACTLY WHAT WILL CAUSE THAT
TO HAPPEN, WE COULD BE WRONG
MAYBE MARKET LOOKS THROUGH
SAYS WE DON’T CARE ABOUT THIS
YEAR’S EARNINGS LOOKING O TO
24, 25 WE ARE MORE SKEPTICAL
ON THAT WOULD BE BOLD CASE IF
MARKET PRICED YOU CAN ALWAYS
FIND THINGS TO OWN WE DO THINK
THE PATH, TO OUR 3900 YEAR-END
TARGET, IS PROBABLY LOWER
FIRST.
MARIA: MIKE, WHAT ABOUT
COMMERCIAL REAL ESTATE THIS
ISSUE THAT WE’VE BEEN TALKING
ABOUT ON THE SET, FOR A LONG
TIME, MARK TEPPER AND ME BOTH,
WORRIED ABOUT COMMERCIAL REAL
ESTATE LOOKING AT OFFICE
SPACE, AND HOW SO MANY PEOPLE
HAVE CHANGES THE WAY THEY
APPROACH WORK A LOT OF
COMPANIES HAD TO RE-- DO NEW
LEASES, ON SOME A OFFICE SPACE
IS COMMERCIAL REAL ESTATE A
PROBLEM THAT IS ABOUT TO
BREAK?
>> YEAH DEFINE COMMERCIAL REAL
ESTATE DIFFERENT POCKETS IT IS
REALLY OFFICE, AND RETAIL, RETAIL HAS BEEN IN A BAD
RETAIL HAS BEEN IN A BAD
SITUATION SINCE THE GOC, THERE
ARE PORTS MULTIFAMILY, WRAUFZ
OF WAREHOUSES WE THINK NEXT
TWO OR THREE YEARS THAT WILL
GET FINANCED BE HIGHER COST.
THIS ALSO FEEDS INTO THE
REGIONAL BANKING, SITUATION,
WE THINK ULTIMATELY FROM OUR
STANDPOINT IS AVAILABILITY OF
CAPITAL GETTING CROWDED OUT
REFINANCE ALL DEBT NEXT COUPLE
YEARS THAT, CROWDED OUT
POTENTIAL LENDING NEGATIVE FOR
GROWTH HE HE OVERALL, A BIG
CRISIS GOING TO BE MORE OF A
DRAG THEN HEADWIND FOR GROWTH.
>> I KNOW YOU FOCUS ON MARGINS
DECLINING WE ARE GETTING
BREAKING NEWS ON AT&T, AT&T
HAS A REVENUE MISS THIS
MORNING STOCK IS DOWN, 4 1/2%,
RIGHT NOW.
THAT IS WHY THE DOW
INDUSTRIALS JUST TOOK ANOTHER
LEG DOWN, DOWN 187, YOU ALSO
HEARD FROM AMERICAN EXPRESS,
ALSO DISAPPOINTING THIS
MORNING, WHAT DO YOU THINK IS
GOING ON IN TERMS OF THE
CONSUMER IF YOU’VE GOT AMEX
TALKING ABOUT A SHORTFALL A,
YOU GOT AT&T, COMING IN LOWER,
SENDING STOCK DOWN 4 1/2%,
ZERO IN ON WHAT THE ISSUE IS.
>> WELL, THE ISSUE IS THAT WE
BASICALLY HAVE YOU KNOW,
ENJOYED A BIG WINDFALL IN
COVID LOCKDOWN BIG STIMULUS WE
OVER CONSUMED A LOT OF THINGS
NOW SEEING CONSUMERS SMALL
BUSINESSES, ROW TRENCH, THAT
IS THE HOW SLOWDOWNS HAPPEN
OVER CONSUME, WE ARE SEEING
STRENGTH IN SERVICES, AS YOU
KNOW, IMPORTANT FOR ECONOMY KEEPING WAGES THE HIGHER, SOME
KEEPING WAGES THE HIGHER, SOME
ECONOMIC VARIABLES, OKAY FROM
SPP SPP.
>> GEARED TO CONSUMER GOODS WE
THINK WITH FORECAST, THAT
BASICALLY PAYBACK, FROM THE
OVERSPENDING OVEREARNING IN 20
2020, AND 21.
>> IS THERE ANY WAY TO HIDE IN
ANOTHER 20% SELL-OFF WITH YOU
WORRIED ABOUT DOLLAR THE VALUE
OBVIOUSLY, DOWN BUT WE’VE GOT
EFFORTS, FROM THE CCP TO
UNDERMINE THE GLOBAL STATUS
RESERVE STATUS OF THE DOLLAR.
ARE YOU WORRIED ABOUT THE
DOLLAR LOSING THAT RESERVE
STATUS AND NUMBER TWO ARE
THERE ANY AREAS, TO HIDE IF IN
FACT WE DO SEE THAT SCENARIO
TAKE PLACE?
>> YEAH, WE ARE NOT WORRIED,
LOSING -- TO CURRENCY STATUS
WE COULD SHARE SOME OVERTIME
YES MULTI.
HESIS S CHANCE OF LOSING
NEAR-TERM LOW, QUITE FRANKLY,
THAT HELPED THE STOCK MARKET,
IN THE LAST SIX MONTHS DOLLAR
HAS BEEN WEAKER THAT ACTUALLY
ALLOWED SOME BUSINESSES TO BE
BETTER WEAKER DOLLAR NOT SUCH
A BAD THING IN TERMS OF
KEEPING ECONOMY GOING I THINK,
YOUR FIRST QUESTION, FOR A
LONG TERM ASSET OWNERS --
PROBABLY DON’T DO MUCH THE
BULK OF DECLINE IN MOST
PORTFOLIO -- THEN DEVIL
ORIENTED STOCKS EQUITIES YOU
WANT TO OWN BECAUSE WE THINK
INFLATION THE IS MERE TO STAY,
EQUITYS ARE HEDGE OVER LONG
TERM PEOPLE HAVE PORTFOLIOS
SIT TIGHT WE ADVISE AGAINST HE
HADING MORE EQUITY RISK IN
HERE TRADING, FOR YOU KNOW
TRADING -- PROBABLY A,
DOWNDRAFT CATCH ON DOWNSIDE
>> DO YOU THINK THE FED WILL
CUT AT SOME POINT THIS YEAR
WE’VE GOT CUT PRICE END OF THE
YEAR, THAT IT IS VERY FLUID
RIGHT NOW, THE FEDERAL RESERVE