Morgan Stanley's Mike Wilson: Could see multiple expansion in the back half of 2026

Summary

Mike Wilson, Morgan Stanley's CIO and chief U.S. equity strategist, joins Squawk Box to outline a base case of double-digit or high-teens earnings growth and broadening market participation in 2026. He expects any equity correction to be bought, sees potential multiple expansion in the second half if the Fed is generous, and favors consumer goods and financials. He also monitors credit markets for signs of an AI capex bust and discusses inflation, tariffs, labor data, and Fed policy.

• Wilson's 2026 base case centers on double-digit or high-teens earnings growth that broadens beyond megacap leaders.
• He expects a correction at some point but believes it will be bought due to growth, earnings visibility, Fed support, and midterm policy support.
• Upside risk: multiple expansion in the back half of 2026 if the Fed is generous, potentially creating bubble-like conditions.
• He favors consumer goods for pent-up demand, tax cuts, lower rates, and affordability efforts.
• He is constructive on financials and banks, citing deregulation and a focus on regional and community banks.
• He sees AI capex as too early for a credit bust, and says credit markets are the key early warning to watch.
• Macro views include sticky inflation as positive for pricing power, uncertain tariff refunds, and a labor market bottoming but lagging data likely allowing Fed cuts.