There has been a lot of debate among market watchers about when this bear market will bottom out, after the stock’s turbulent first half. But Morgan Stanley’s chief investment officer believes the end of this bear market will come “very quickly”. That’s because the economic cycle has been “unusually fast,” Mike Wilson, chief US equity strategist at the investment bank, told CNBC on Friday. “The deflation itself, the V-shaped recovery … then the timing of the Fed and … peak employment. So we’re just ripping through this cycle, much faster than we’ve seen in previous cycles,” he said. Squawk Box Asia on CNBC. “And that’s good news. Because that means the conclusion of this bear market is coming fast, you know, it’s going to be painful, but it’s going to be fast.” Read More Has the Bear Market Reached the Bottom? Goldman’s Oppenheimer delivers his verdict – and reveals where he sees ‘great opportunities’ Is the bear market coming to an end? Here is one indicator that professionals say they are watching closely Citi calls its ‘higher conviction ideas’ for the second half of 2022 – and gives an 85% upside. Last month, the S&P 500 fell into a bear market – or 20% from the top. Last levels hit in January – and still there. The Nasdaq and Dow Jones Industrial Average are also down, dropping about 28% and 16% year-to-date, respectively. It comes after the first half of the year – the worst since 1970 – as recession fears and hyperinflation caused investors to flee stocks. At what level will the S&P 500 index fall? The S&P 500 closed at 3,863.16 on Friday – Wilson says that in the event of a recession, the bottom in the S&P 500 is likely to be around the 3000 level. However, in a soft-down scenario, where a recession is avoided, the bottom is expected to about 3400. But he stressed that the strength of the dollar is a major headwind for the index. “The S&P 500 is really going up against the coin,” Wilson said. “Immediately [the dollar is] By 17% year over year, we think it could rise until the Fed pivots. So you’re looking at somewhere between an 8% to 10% headwind for S&P earnings growth.” He added that even if there’s no recession, there is still “meaningful” downside risk. We’ve been much lower in earnings and Wilson said that’s really the difference. Morgan Stanley is currently “very defensive,” Wilson said, and is overweight in healthcare, utilities and REITs.
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