'The bear is still alive,' claims Morgan Stanley's Wilson

Morgan Stanley analyst Michael Wilson told investors in a note Monday that "the bear is still alive."

The analyst made the claim based on his firm's boom/bust framework. The analyst noted that with the S&P 500 rally now crossing the 20% threshold, more investors are declaring the bear market is officially over.

"We respectfully disagree due to our 2023 earnings forecast. Ironically, a Fed pause may awaken the bear tactically just as liquidity headwinds ramp up," wrote Wilson.

"Interestingly, this bear market thus far looks quite similar to the 1946-48 period, which coincides well with our boom/bust regime analysis from that era."

Wilson also said the firm is watching earnings quality, which "as measured by net income-to-cash flow, recently reached its weakest level in the past 25 years."

By Sam Boughedda

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