Bloomberg Talks: “Morgan Stanley Chief Equity Strategist Mike Wilson Talks Markets”

Date: November 24, 2025
Host: Lisa (Bloomberg)
Guest: Mike Wilson, Chief Equity Strategist, Morgan Stanley

Episode Overview

In this episode, Bloomberg’s Lisa sits down with Mike Wilson, Morgan Stanley’s Chief Equity Strategist, to discuss his bullish outlook for the S&P 500 in 2026, the role of Fed policy, market liquidity, and the evolving narrative around economic cycles and AI-driven investment. Wilson addresses the risks and opportunities in the current market environment, debates policy responses, and unpacks the dynamics behind the predicted bull market and rotation into lagging sectors.

Key Discussion Points & Insights

1. Mike Wilson’s Bullish Outlook and Rotational Thesis

(00:29–01:16)

• Morgan Stanley raises its S&P 500 target for 2026 to 7,800, citing strong earnings growth and a new bull market.
• Wilson emphasizes optimism, not just for mega-cap tech, but for a broader rotation into other, previously lagging sectors.
  • “We think...the policy is still misunderstood. Right. That they essentially came in this year, did the growth negative stuff first, and now we're looking at the growth positive stuff. I’m not worried about the economy.” (01:16, Mike Wilson)

2. Economy: Rolling Recession vs. Broad Rebound

(01:50–02:17)

• While others fear a conventional recession, Wilson argues the US has experienced a “rolling recession” in the private economy (housing, durable goods, commodities, transportation).
• He expects these areas to rebound as government crowding-out diminishes and the Fed begins cutting rates.
  • “We had a recession. We went through a rolling recession in the private economy...many parts of the economy have been suffering...Now you'll see the private economy now doing much better.” (02:17, Mike Wilson)

3. Importance of a Clear Fed Policy Path

(03:02–04:38)

• Wilson stresses the market needs a clear, concerted Fed easing path—one-off or “meeting by meeting” cuts are insufficient.
• Fed actions will be informed either by labor market data or by financial stress; markets will ultimately force the Fed’s hand if liquidity issues arise.
  • “Markets are like children, right? They have a little temper tantrum and then...the Fed will respond...So is this like a mini 2018...there’s stress...and then they provide more balance sheet [support].” (03:31, Mike Wilson)

4. Liquidity, Market Vulnerability, and Crypto’s Role

(04:38–05:35)

• Recent crypto sell-offs and financial stress reflect broader market fragility and underscore liquidity’s central role.
  • “I think this has been there the whole time...liquidity is important for the market...it’s the invisible hand.” (05:00, Mike Wilson)

5. QE and Balance Sheet Expansion

(05:35–06:14)

• Wilson expects the Fed may have to expand its balance sheet (not necessarily calling it QE) to support growth and financial stability, especially as CapEx (capital expenditure) ramps up.
  • “The balance sheet needs to expand not only to support financial markets, but to support the better growth that I think is coming next year.” (05:39, Mike Wilson)

6. S&P 500 Target Dependency on Fed Action

(06:08–06:35)

• The bullish 7,800 S&P target is contingent on either more-than-expected rate cuts or balance sheet expansion.
  • “If we don’t get at least one of those items, surprising the markets...then we’re not going to reach our target.” (06:14, Mike Wilson)

7. Tech Valuations and Real Economy Acceleration

(06:35–07:29)

• High valuations in big tech are sustainable only if real economic activity and productivity gains—especially those linked to AI—materialize.
• Risks remain if the foundational “technology investment” thesis falters.
  • “These stocks are not going to work...if the foundation isn’t being supported by the technology investment.” (06:57, Mike Wilson)

8. AI, CapEx, and Market Breadth

(07:29–09:46)

• There’s a widening dispersion between AI/capex “spenders” and “beneficiaries”; discipline is increasing, but the money will be spent.
• The competition among hyperscalers and tech companies is intense; only a few will win, but the sector's capital cycle is maturing.
  • “It’s healthy. Not everybody’s going to win...these new industries that are going to be created, the efficiencies...health care, education, manufacturing, that’s coming, that’s where real wealth creation is going to be coming from.” (09:06, Mike Wilson)

9. Fed Chair: Importance Versus Market Dynamics

(09:46–10:52)

• Wilson downplays the importance of who serves as the next Fed Chair, arguing that markets themselves dictate policy via their influence on financial conditions and funding stability.
  • “It doesn’t matter to me, because ultimately the market’s going to tell the Fed what to do...They are not independent of the markets.” (10:00, Mike Wilson)

Notable Quotes & Memorable Moments

• On Market-Fed Dynamics:
  “Markets are like children, right? They have a little temper tantrum and then...the Fed will respond...” (03:31, Mike Wilson)
• On Liquidity’s Power:
  “Liquidity is important for the market...it’s the invisible hand.” (05:00, Mike Wilson)
• On Market Leadership:
  “These stocks are not going to work...if the foundation isn’t being supported by the technology investment.” (06:57, Mike Wilson)
• On Fed Independence:
  “They are not independent of the markets. They are not independent of the funding requirements of the U.S. government.” (10:00, Mike Wilson)

Timestamps for Key Segments

• S&P 500 2026 Outlook & Rotation Thesis: 00:29–01:16
• Recession, Private Economy, and Policy Impact: 01:50–02:17
• Fed Response—Rate Cuts and Liquidity: 03:02–04:38
• Liquidity, Crypto, Market Stress: 04:38–05:35
• Balance Sheet Expansion/QE: 05:35–06:14
• AI, Tech Valuations, and Risks: 06:35–07:29
• CapEx and Market Breadth: 07:29–09:46
• Fed Chair’s Role & Market Power: 09:46–10:52

Summary

Mike Wilson’s interview is a candid look at Morgan Stanley’s bullish, yet conditional, view on US equities—a conviction that relies heavily on the Fed’s eventual policy pivot and broadening economic participation. His arguments emphasize both the cyclical recovery in lagging sectors and the critical importance of liquidity and policy signaling. While Wilson is confident in continued gains, especially with AI-driven productivity and CapEx, he’s clear-eyed about the risks and maintains that, ultimately, markets—not central bankers—set the ultimate course for financial conditions and returns.

For listeners seeking actionable insights:
Wilson’s perspective encourages monitoring Fed communications, financial stress metrics, and spending patterns within tech and industrial sectors as key signals for the next phase of the bull market.