Morgan Stanley’s chief US equity strategist Mike Wilson warns that markets are still in a bearish cycle and investors are being fooled by a spike in liquidity.
In a new Bloomberg Television interview, Wilson predicts that equities will finish out the year weaker than they are trading at today due to adverse macroeconomic fundamentals.
He says an injection of new liquidity from the Federal Reserve’s emergency loan program established to rescue collapsing banks is propping up the markets and misleading investors.
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The Business Standard reported in March that the FED’s Bank Term Funding Program could inject as much as $2 trillion into the US banking system to ease the liquidity crunch.
Says Wilson,
“We think the overriding driver of this year’s rally has been increased
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