“Adam Parker, Morgan Stanley’s Chief U.S. Equity Strategist, has maintained a year-end price target of 1,167 for the S&P 500 all year. And he has been getting a lot of criticism for his bearish call.
But he’s sticking to it.
One reason is because he considers his base-case earnings outlook to be relatively optimistic. “In fact, it really doesn’t take into account the Fiscal Cliff in any way, meaning downside to our base case is likely,” he writes.
In a new note to clients, he visits “extreme bear case scenarios” for S&P 500 earnings in 2013. It considers a worst-case fiscal cliff scenario, which would cut 5 percentage points from GDP, and the earnings collapses experienced in the last three recessions.
From Parker’s note:”
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