Investors are already looking beyond the US-Iran war, according to Morgan Stanley Chief Investment Officer Mike Wilson, even with the two sides working on a deal that defers many of the conflict's thorniest issues. He speaks with Lisa Abramowicz and Annmarie Hordern on ``Bloomberg Surveillance.''
--------
More on Bloomberg Television and Markets
Like this video? Subscribe and turn on notifications so you don't miss any videos from Bloomberg Markets & Finance: https://tinyurl.com/ysu5b8a9
Visit http://www.bloomberg.com for business news & analysis, up-to-the-minute market data, features,...
What Michael Wilson said
Written from the verified transcript and checked against it. Every figure links to the moment it was said.
Michael Wilson, Morgan Stanley's Chief U.S. Equity Strategist, argued the current bull market is earnings-driven, not multiple-driven, with nominal GDP booming at 7-8%. He said the market has moved past the Iran war and tariffs, citing oil peaking at $125, far below Russia-Ukraine war levels, signaling bearish oil prices. Wilson described 2026 as a series of commodity rotations driven by Fed liquidity, now decelerating from $40 billion to $10 billion monthly in the RMP. He expects a summer correction with a leadership rotation into regional banks and consumer goods, not a bull market end. He noted the Fed, Treasury, and deregulation added over half a trillion dollars in liquidity, but multiples have fallen. Wilson said Fed chair Kevin Walsh inherits a decelerating balance sheet, and the Fed will provide more liquidity only if markets pressure them. He reaffirmed the 8,000 S&P year-end target, expecting AI stocks to correct no more than 10%.
Key takeaways
Nominal GDP is booming at 7-8%, driving an earnings-led bull market with flat-to-down multiples.
Oil peaked at $125 during the Iran war, far below Russia-Ukraine levels, signaling bearish oil prices.
Fed RMP purchases decelerated from $40 billion to $10 billion monthly, already in place for Kevin Walsh.
Fed, Treasury, and deregulation added over half a trillion dollars of liquidity to the system.
S&P 8,000 year-end target remains intact; AI stocks may correct but not more than 10%.
0:00This idea of what a bull market means, does it mean stocks just go up into the right, or does this mean that there is some sort of cyclical undercurrent that shows an economy that truly is strengthening?
1:29How much does that kind of torpedo some of this thesis?
2:55What if we get a hawkish Kevin Walsh? Could that hurt the rotation?
5:33Do you think that the trade in terms of bullish on commodities is ending?
6:42Well, I guess another way to ask is do you expect that Fed chair Kevin Walsh to pull back some of this liquidity in the face of these pockets of froth as you called them?
7:56... see a rotation away from some of the hyperscalers, away from some of the semiconductors, given how much they've rallied, given the proportion of them into the entire rally, and given how small the relative economy has gotten in response?
Mike Wilson of Morgan Stanley writing, if there is a stable resolution in the Middle East, the bond market might walk back the Fed hike it's currently pricing in. Our conviction in the current bull market is intact. Mike joins us now for more. Mike, always great to see you. Thanks for being here. Let's start there. This idea of what a bull market means, does it mean stocks just go up into the right, or does this mean that there is some sort of cyclical undercurrent that shows an economy that truly is strengthening?
Well, let's go back to why we're in a bull market. It's all about the recovery from the rolling recession from a year ago, this operating leverage story. It's an earnings driven bull market. Right? So last year, we got the multiple expansion in advance of predicting that was gonna happen. And as you recall going into this year, there were a lot of boo birds on the economy. People were very nervous about earnings, and we took the opposite view. I mean, nominal GDP is booming. It's seven to 8%, and that's in place. So what's going on now is the multiple's coming down over the last six months, but the earnings have been so good that the market can still go up. So the next phase of the bull market at this stage typically is multiples are flat to down. Earnings come through as expected, but that can drive the stock market higher, and you get rotations to the areas where that earnings growth is underappreciated. And we think that yesterday's action is some evidence that maybe we're gonna have that next rotation. We've already had several rotations this year, and we think that next rotation is in some of the areas you mentioned, like regional banks or consumer goods, which are asymmetrically positively inspired by oil prices coming down.
This has been the argument that the rally in the equity market is entirely driven by fundamentals, and then SpaceX happened. How much does that kind of torpedo some of this thesis?
Well, look. I mean, markets are driven by fundamentals and animal spirits at the same time. You can't separate the two. They work in harmony. And so yeah, it's a little frothy right now in certain areas. I mean, not necessarily in those areas, there's a lot of leverage in the system in semiconductors as an example, and that's coming out now a little bit. That's something we wrote about two weeks ago. To me, that's a healthy development as long as there's some place to go to. Right? And so if there's no place to go to, then you can have a much more serious downturn that can turn into something that's more severe. I don't think that's happening. We think this is a normal transition. I wanna go back once again to the beginning of the year when people were really kind of pessimistic about growth. All we've seen this year is one rotation to the next from commodities. Okay? What happened this year? The Fed started printing money again. Right? They did the RMP. That went into gold and silver stocks, then it went into metals and rare earths, then it went into energy stocks, ended up in semiconductors. Where do all those have in common? They're all commodities. Okay? So we've had a commodity rally basically bouncing around, and we think now we're gonna get that broadening out story. It was going in January and February, and it was halted by the war in Iran and the oil price spike and the repricing of the Fed. That now is subsiding, and so we can rotate back to some of these areas, procyclical areas where the earnings are quite good, but they're underappreciated by the market.
We'll define hawkish Kevin Walsh. I mean, there's a couple ways to think about that. I think one is on the rate side, which I think is unlikely. Okay. The other is on the balance sheet, and we don't really know yet how he's gonna wanna position that. What I would say, we've heard about this this past week, is we already know what's happening, okay, which is that Jay Powell left him a nice little package, which is that we're basically already seeing a deceleration in the RMP. Okay? So this is a I've spent the last two years painstakingly trying to follow liquidity because that has been the main driver of the animal spirits. And it was very positive at the beginning of the year when they restarted the RMP or asset purchases, and you had treasury buybacks as well. And the SLR increased some capital from the banks. That now is decelerating. Right? You've moved on from 40 billion a month in RMP to 10 billion a month. So that's a deceleration that's already in place. He's inheriting that. Is he gonna come out and say, hey, we're gonna increase that? Probably not. Is he gonna say we're gonna kill it? Probably not. But that deceleration is still in place. So I think we already know the answer to the test. Okay? We're having a deceleration in liquidity in the moment, and that to me, as we've been talking about, is sort of where you can have this summer chop and summer correction. Like, in this rotation yesterday, you said it already, we're getting a rotation in a down tape. Okay? That's what I expect. We're gonna get a down tape, but we're gonna get a rotation, and that's a signal that we're seeing a leadership change.
What's the next risk on the horizon? The market was able to get through tariffs. Obviously, they're looking beyond now the conflict in Iran. For the rest of the year, is it just that potentially? I mean, the president says if he sees in Iran, he'll start strikes again. Is that what potentially could be disruptive?
7 more exchanges in this transcript
Sign in free to read the rest of this interview. No card required.
Wilson, M. (2026, June 17). Morgan Stanley's Wilson Says Investors Looking Past War [Interview transcript]. Bloomberg Television. CEOInterviews.AI. https://ceointerviews.ai/interview/991001/
MLA
Michael Wilson. "Morgan Stanley's Wilson Says Investors Looking Past War." Bloomberg Television, 17 Jun. 2026. Transcript, CEOInterviews.AI, https://ceointerviews.ai/interview/991001/.
BibTeX
@misc{wilson2026_991001,
author = {Michael Wilson},
title = {Morgan Stanley's Wilson Says Investors Looking Past War},
howpublished = {Interview transcript, Bloomberg Television. CEOInterviews.AI},
year = {2026},
month = {jun},
url = {https://ceointerviews.ai/interview/991001/},
note = {Speaker-attributed transcript with timestamps}
}
