First it was Goldman capitulating on its near-term tactical bearish outlook (as discussed yesterday), now it’s Morgan Stanley’s turn.

One month after Morgan Stanley’s chief equity strategist Michael Wilson emerged as Wall Street’s biggest bear, warning that “rolling corrections” across various asset classes could push the market down as much as 20%, Wilson this morning reluctantly joined the bullish bandwagon writing that “on the back of another exceptionally strong earnings season, we mark our forecasts to market and raise our earnings forecasts despite our leading indicators suggesting upward momentum to earnings revisions stalls. Our price targets generally stay the same (YE21 to 4,000 from 3,900 and June 2022 remains at 4,225) as we lower target multiples due to rising interest rates and stable equity risk premiums.”

But while Wilson may have capitulated on his steadfast bearishness which kept his price target at 3,900 even as most of his peers hiked well into the 4000s to keep up with actual prices, he remains adamant on his mid-cycle thesis, noting that “this ongoing de-rating is central to our mid-cycle transition thesis.” As a result, he is also raising his bull case and lowering his bear to “reflect greater uncertainty over the durability of the current pace of earnings growth, record leverage among equity owners, and expected tapering by the Fed.”

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