专家警告政府支出可能加剧股市大起大落

U.S. stocks have skyrocketed since their dreary end to 2022—but Morgan Stanley’s Mike Wilson is convinced equities are in a “boom-bust” position.

Wilson, the company’s chief U.S. equity strategist, told clients in a weekend note that while U.S. government spending had helped prop up markets and the economy, it could be setting equities up for problems further down the line.

“The main takeaway for the equity market this year is that fiscal policy has allowed the economy to grow faster than forecast, giving rise to the consensus view that the risk of a recession has faded considerably,” he said, adding that with the recent lifting of the debt ceiling this could continue until 2025.

The U.S. economy has remained resilient even in the face of rapid monetary tightening by the Federal Reserve. However, prolonged fiscal stimulus would widen the government deficit—one of the concerns flagged by Fitch when it downgraded America’s credit rating last week.

The government says its spending has “ensured the wellbeing of the people of the United States,” with the Biden administration touting GDP growth and cooling inflation as proof that its economic policies have worked.

Wilson——who was ranked No. 1 in last year’s Institutional Investor survey after correctly predicting the selloff in stocks—noted however that fiscal spending appeared particularly “excessive” when compared to the U.S. unemployment rate, which stood at just 3.5% last month.

He also flagged that last week’s selloff of government bonds—which fund fiscal expenditure—would have consequences for the stock market.

Investors will call into question equity valuations, he predicted, adding: “If fiscal spending must be curtailed due to higher political or funding costs, the unfinished earnings decline that began last year is more likely to resume.”

‘Boom-bust’ risk

In an interview with Bloomberg on Monday, Wilson reiterated his concerns that the U.S. government may be using too much of its fiscal ammunition too soon, which could ultimately dampen stock valuations.

“Think about it this way: they’re doing 8% budget deficit spending when you have 3.5% unemployment—that’s really unprecedented,” he said. “So, what’s going to happen if we do have a slowdown next year? [That’s why] I just think this boom-bust thesis is so correct.”

The S&P 500, which is home to some of the world’s biggest companies, is up almost 20% so far this year after suffering its worst year since the financial crisis in 2022.

And while many Wall Street giants have been drastically raising their price targets for the blue chip index on the back of its rally this year, Wilson has refused to follow suit and insisted that “the bear is still alive.”

“Maybe the markets are looking through it to the to the other side—[but] that’s a risky proposition, given where valuations are,” he told Bloomberg. “It was a great idea to buy stocks last fall, we traded it, we didn’t stick with it long enough, but I think at this stage you need to be very selective for some sort of retracement at least back to the 200-day moving average.”

The S&P 500’s 200-day moving average currently stands at around 4,100 points—almost 10% lower than where the index itself is trading.

Wilson isn’t the only big-name banker to warn about the impact of increased government interventions.

In an interview with The Economist last month, JPMorgan CEO Jamie Dimon was asked whether he approved of Bidenomics—a raft of policies rolled out by the Biden administration that have involved increasing federal spending in a bid to boost economic growth.

“I think when they write books about this 10 years from now, a lot is going to be about how it didn’t work, [it was] ineffective, companies feeding at the trough, Solyndras taking place again, so I would caution people, yes, do it, but be really careful,” he said.

Bearish predictions

Wilson, one of Wall Street’s most prominent bears, has long been making gloomy predictions about U.S. stocks, warning investors in May not to be fooled by the S&P 500 rally.

Earlier this year, he predicted that a 20% downturn was imminent for U.S. stocks—and has recently reflected on why his projections missed the mark.

“We were wrong,” he conceded in a note to clients last month. “2023 has been a story of higher valuations amid falling inflation and cost cutting.”

In Monday’s interview with Bloomberg, Wilson said he “should have gone with his instinct” and revised his market calls in January when he feared that Morgan Stanley’s outlook was too bearish.

“We missed this fiscal impulse, that was a big mess on our part,” he said. “We thought the fiscal impulse would come at the time that [the government] really needed it.”

His base case for June 2024 is now for the S&P 500 to drop to around 4,200 points—a drop of just 7% from current levels.

In a bear case scenario, however, he has forecast that the blue-chip index could plummet as low as 3,700, meaning they would shed almost 20% from where they are now.