Morgan Stanley (NYSE: MS)’s “bull case” has anticipated a nearly 30 percent gain by the S&P500 in the next 12 months to $3,000. New chief of U.S. equity strategist Michael Wilson wrote in a statement to clients, “The cyclical upturn that began a year ago has less to do with President Trump simply “turbocharging” things.” “The end of the cycle is often the best,” he added as he projects a late-cycle burst. “Think 1999 or 2007-07. In a low-return world, investors cannot afford to miss it.
“Exceptionally loose financial conditions encourage the shift toward investor euphoria,” Wilson wrote Monday. “Market technicals are in very good show [now] … 2016 was a difficult investment year for many, but the reality is that if one simply followed the business cycle and ignored the political one, it was fairly straightforward.”
This is Wilson’s first major strategy note even though he has been at the company for 27 years. Wilson also stated that the energy sector is the single largest driver of the S&P500 earnings growth for 2017. “Energy is classic late-cycle sector and it could offer a modest hedge against potentially rising geopolitical risk,” he wrote.