Morgan Stanley’s chief financial officer (CIO) and US equity strategist, Mike Wilson, warns of one thing that could have a devastating effect on stocks.
In a new CNBC interview, Wilson he says His main concern for the stock market right now is rising bond prices.
“The biggest issue, the biggest risk, if there is one right now, would be the risk of the deal starting again, which might be a foreshadowing of the Iran conflict or other external events.” And the oil, the private loans, you know, start to affect the negative side.
Wilson says rising bond volatility worries him because it reduces market capitalization.
“And that’s the biggest driver of commodity prices now if we’re going to go past (the yield on the 10-year Treasury bond going above) 4.50%.”
The yield on the 10-year Treasury bond is currently 4.39%.
According to Wilson, the current rally in stocks, which saw the S&P 500 index rise sharply in April despite the country’s turmoil, is driven by strong growth in business investment.
“The development of the financing issue has been very impressive, which people ignore.
So I’ll give you an example. Average income within the Russell 3000 (index)… So this is like the 1500th-largest company in the broad market now growing profits close to 14% per year. So the larger story, I think, is still a bit smaller. “
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