Bear market is almost over but the last phase may be 'vicious'

The Federal Reserve's rush to provide banks with liquidity amid a contagion crisis should not be a green light for investors to take risky bets, Morgan Stanley chief investment officer Mike Wilson said in a Monday note.

"The bottom line is that we think this is exactly how bear markets end," the reputed bearish analyst wrote."In this case, it's the fact that earnings growth expectations are much too high given the headwinds companies are facing, and the fact that the Fed is hiking rates during a period of contracting earnings."

But Wilson said that this liquidity will only have short-lived benefits, and won't alleviate tight lending conditions that are adding to a credit crunch.Silicon Valley Bank"None of these reserves will likely transmit to the economy as bank deposits normally do," he said."Instead, we believe the overall velocity of money in the banking system is likely to fall sharply and more than offset any increase in reserves, especially given the temporary/emergency nature of these funds.

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Bank turmoil could bring 'vicious' end to bear market, Morgan Stanley saysMorgan Stanley economist Michael Wilson said the recent banking-sector crisis is likely to bring an 'early and painful' stages of exiting the bear market. the whales are getting nervous and pumping up the lake seeing torches n pitchfork on the beaches
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