last week, but Morgan Stanley strategist Michael Wilson is having none of it,
“With the S&P 500 rally now crossing the 20-per-cent threshold, more are declaring the bear market officially over. We respectfully disagree due to our 2023 earnings forecast… …Earnings recessions over the past 70 years have often bottomed very close to 16 per cent, the decline we are forecasting for 2023 EPS growth based on output from our earnings models.
“Q2 2023 sequential earnings were negatively affected by lower revenues and rising PCLs, as concerns mounted related to loan risks and the overall health of the economy. Credit quality continued to normalize in Q2 2023 from unsustainably low levels. A potential recession, combined with materially higher borrowing costs for creditors, would likely amplify credit deterioration beyond normalized levels.
“Large Canadian Banks Q2 2023 Earnings Round-Up: PCLs Ramp Up, Driven by Weakening Credit Quality and Macroeconomic Concerns” -The Bank of Canada got blamed for U.S. market volatility, according to CIBC economist Avery Shenfeld, “The most unusual headline we saw wasn’t in reference to air quality, but to a dip in the U.S. equity market that was attributed to a Bank of Canada rate hike on Wednesday. … The FOMC could indeed opt to follow the Bank of Canada’s lead next week, but perhaps it would also note what happened two days later, when Statistics Canada reported a two-tick climb in the unemployment rate and a drop in employment and hours worked.