Zhitong Finance APP learned that Michael Wilson, chief strategist of the well-known Wall Street bears - Morgan Stanley , said today that investors should continue to be optimistic about the US stock market before this week's US midterm elections. Wilson had accurately predicted the plunge in the U.S. stock market this year.
Wilson wrote in a report on Monday that polls showed that Republican people would win a majority in at least one of the House and Senate of Congress, which could be the strongest catalyst for the downward trend of U.S. bond yield and the rise in stock price , which would be enough to keep the bear market rebound. It is understood that Wall Street banks generally hope that history can repeat itself—that is, the stock market showed an upward trend after midterm elections .
U.S. citizens will collectively go to the polling station on Tuesday local time to decide on bipartisan control of the Senate and House of Representatives, the gubernatorial positions in 36 states, and other local elections and voting activities. Wilson said that if the Republican Party "wins a big victory", it will greatly increase the possibility of freezing fiscal spending and reducing historical high budget deficits, driving a sharp rise in 10-year U.S. Treasury yields are opposite to price trends), thereby pushing stocks to continue to rise.
In addition, this week is also important for the market, as the U.S. Consumer Price Index (CPI) to be released on Thursday will show whether the Federal Reserve's interest rate hike is pulling down inflation. Federal hikes hikes hikes hikes four times last week 275 basis points. Fed Chairman Jerome Powell said that in the future, the benchmark rate will be higher than the previous FOMC expectations and the high interest rate will remain "for some time", which puts huge pressure on the recent rise in US stocks. US stocks broad market - S&P 500 hikes recorded its worst weekly performance since September.
After the Federal Reserve announced its decision to raise interest rates, U.S. stocks plummeted
Morgan Stanley chief strategist Wilson and his team said that before the results of the midterm elections were announced, the short-term market is expected to fluctuate, especially considering the anxiety caused by the announcement of the Consumer Price Index (CPI). However, they are optimistic about the trend of US stocks, believing that the interest rate volatility may drop further.
Another Wall Street major bank JPMorgan Chase strategists wrote in a report on Monday that they are also optimistic about the outlook for U.S. stocks against the background of possible peak U.S. Treasury yields, "very pessimistic" investment sentiment and position and good seasonal factors. Wilson, chief strategist at Morgan Stanley, wrote that if the S&P 500 wants to reach the short-term rebound point set by Morgan Stanley, that is, the upward target of 4,000 points to 4,150 points, it will rise by up to 10% from the previous closing point , "We need to see the back-end interest rate level also begins to decline," Wilson said.
As one of Wall Street's most famous short singers, Wilson said in mid-October that he "does not rule out" that the S&P 500 will rebound to about 4150 points in the near term.
It is understood that the bank's strategists use 3,625-3,650 points as the stop loss bits of the S&P 500 index. They also said that if the 10-year Treasury yield reached a new high of 4.35%, customers should consider exiting bullish trading, stressing that this would significantly reduce the likelihood of the S&P 500 reaching the 3,950 point.
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