MORGAN STANLEY: Trump's trade war is only part of the battle. Here are 4 other reasons the stock market's struggles are just beginning.

Mike Wilson — the firm's chief US equity strategist and CIO, who has

Meanwhile, he says factors like the trade dispute and shaky earnings growth could make investors more pessimistic.Stock-market volatility has surged over the last few days amid worsening trade-war rhetoric, and Wilson says it could stay high, even if a trade deal is reached. In his view, the chart below is evidence that volatility will remain elevated over the next year or two.

Wilson says that when the difference between short- and long-term rates get smaller, the VIX tends to rise three years later.Twice this year, parts of the yield curve have inverted twice this year, meaning short-term yields were higher than long-term ones.Traders have been pleasantly surprised by the earnings companies have reported in the last few weeks. But Wilson still thinks ais coming, and that other analysts will have to cut their projections to reflect those weaker results.

He illustrates that idea with this chart, which suggests earnings will be weaker than currently expected, and that analyst estimates will have to come down.Wilson isn't predicting that the US economy is going into a recession, but he says the risks of one happening are increasing. He writes that one of Morgan Stanley's own internal economic gauges shows that the economy is now in a downturn, and when that happens, stocks typically don't perform as well as bonds.

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