MORGAN STANLEY: This earnings season is the 'moment of truth' for stocks. Here's why the signs are pointing to a major disappointment for investors.

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Morgan Stanley's top US equity strategist says investors want signs of improving earnings growth, and thinks the market is poised for disappointment.

. While analysts think profits will start growing again in the second quarter and wind up with growth of about 5% this year, Wilson expects an"earnings recession," meaning at least two quarters of flat or negative earnings growth.

That's illustrated by this chart. Wilson says analysts are expecting earnings growth to quickly recover to its 2017 pace, but he doesn't see much evidence that that's going to happen. Analysts expect company earnings to improve later this year, but Mike Wilson of Morgan Stanley has doubts about that pickup.Earnings consistently come in better than analysts expect, which might create some hope that profits will end up a bit better than the first quarter of last year. Wilson warns investors not to expect that because estimates have fallen so sharply. When that happens, he said, companies typically don't beat expectations by very much.

"A lowered bar into the quarter does note mean the likelihood of a beat is greater," he wrote."The forecasts for have been lowered substantially and we do not think we are going to see a beat big enough to lift index growth into positive territory."simply click here to claim your deal and get access to all exclusive Business Insider PRIME content.

 

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Morgan Stanley: Wall Street is wrong, there will be an earnings recession this yearMorgan Stanley is calling for a full-blown earnings recession, while many other analysts see one negative quarter and a return to positive profit growth by the second quarter. Bullish Retail investors IRL Yep they said the same in 2008 , the market is fake and being propped up by banks , no way is the economy at 26,000 on the Dow especially when the White House is Calling for Q4 and a cut , they know what earnings are coming
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