Earnings Are Surprisingly Strong, Says Morgan Stanley's Wilson

Summary

Mike Wilson, Morgan Stanley's chief US equity strategist, argues that the earnings recovery is stronger and broader than many think, with the median Russell 3000 stock growing earnings 14%. He highlights opportunities in consumer goods, industrials, and financials that were beaten down. He also discusses bond volatility as a potential risk but sees valuations as fine.

• Wilson says earnings recovery is stronger than most believe, with broad-based upgrades beyond just Micron.
• The median stock in the Russell 3000 is growing earnings by 14% year over year.
• Wilson is bullish on consumer goods, industrials, and financials, having doubled down on them recently.
• He views current S&P 500 valuations around 21.5x earnings as justified by the earnings picture.
• Bond volatility is seen as a bigger risk to equity multiples than the level of 10-year yields.
• The 450 level on the 10-year yield is less important now due to improved earnings.
• Wilson notes that the broadening earnings story is underappreciated by the market.
• He acknowledges potential headwinds from geopolitics or oil but remains constructive.