Morgan Stanley Says ‘Likely’ Fed Pivot Won’t End Earnings Pain

Michael J. Wilson, one of Wall Street’s biggest equity bears, says a Federal Reserve pivot is becoming likely amid falling money supply, but such a move won’t allay concerns about earnings.

“We find M2 growth in what we call the ‘danger zone’ -– the area where financial/economic accidents tend to occur,” Wilson, Morgan Stanley’s chief US equity strategist, wrote in a note on Sunday. While “a Fed pivot is likely at some point,” the timing is uncertain and it won’t change the trajectory of earnings estimates, he added.