Morgan Stanley: Bear Market Rally Is Over

 The recent rebound in equity markets will prove short-lived, one of Wall Street’s most vocal bears said on Monday, advising investors to seek refuge in bonds as economic growth slows, Bloomberg reported.

“The bear market rally is over,” Morgan Stanley Chief US Equity Strategist Michael Wilson wrote in a note to clients. “That leaves us more constructive on bonds than stocks over the near term as growth concerns take center stage – hence our doubling down on a defensive bias.”

Wilson’s thesis is that the US economy is heading for a sharp slowdown, due to a “payback in demand from last year’s fiscal stimulus, demand destruction from high prices, food and energy price spikes from the war that serve as a tax, and inventory builds that have now caught up to demand.”

This less forgiving macroeconomic backdrop will become increasingly harder for investors to ignore, as it eats away at corporate profits.