Morgan Stanley’s Michael Wilson and other prominent U.S. equity strategists are bearish on equities for the remainder of 2023 but expect a recovery in 2024. Credit Suisse’s prominent global strategist Andrew Garthwaite is exactly the opposite, expecting the current rally to continue this year but finding the market risks for 2024 ‘unappealing’.
Economic data is also surprising to the upside, to the greatest extent in seven years. Speculators are either absent from the market or bearish, and if they begin to chase the rally it could form another positive boost to returns. The strategist notes that U.S. earnings per share is two per cent above the long-term trend. The average trough for earnings growth is 18 per cent below trend. Mr. Garthwaite estimates that investor risk appetite is in the 65 percentile of the historic range, limiting upside.