Mike Wilson of Morgan Stanley, who has been spot on for the past year earning him the #1 ranked analyst in 2022 by Institutional Investors survey, wrote,
“The risk-reward for equities is now “very poor,” especially as the Fed is far from ending its monetary tightening, rates remain higher across the curve and earnings expectations are still 10% to 20% too high.”
According to Wilson, that doesn’t bode well for stocks, as the sharp rally to start this year has left them the most expensive since 2007.
Wilson says stocks have now entered a level known he calls the “death zone,” suggesting the SPDR S&P 500 (SPY) could drop by as much 26% to around the 300 level by summertime.
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