Morgan Stanley's Mike Wilson Says We're Still in a Bull Market

Summary

Morgan Stanley Chief US Equity Strategist Mike Wilson says equities remain in a bull market, supported by better-than-expected earnings and derated multiples, with the S&P 500 still the highest-quality equity market. He sees higher oil/product prices and rates as the main near-term equity risk and advises investors to keep energy stocks as a hedge, favor quality over lower-quality stocks, and underweight long-duration bonds. He also prefers US equities over foreign markets, sees gold and crypto as inflation hedges, and expects AI broadening to shift from enablers to adopters. Near term, he warns a correction is possible from oil or issuance-driven liquidity tightening, but not the end of the bull market.

• Equities remain in a bull market; earnings have beaten estimates while multiples have derated.
• S&P 500 is favored as the highest-quality equity market; overall equity exposure should not be reduced.
• Higher oil/product prices and rates are the main near-term risk; product crack spreads are extreme.
• Energy stocks should be owned as a hedge; oil prices are likely to rise near term.
• Quality and free-cash-flow factors are preferred over low-quality early-cycle stocks.
• Underweight long-duration bonds; gold and crypto are inflation hedges.
• AI broadening is shifting from enablers to adopters, with winners across consumer, health care and financials.
• A near-term equity correction is possible on oil or issuance-driven liquidity tightening, but it would not end the bull market.