Morgan Stanley Sounds Alarm on Oil Price Impact on Stock Market
Morgan Stanley's chief US equity strategist Mike Wilson has sounded the alarm on potential market liquidity issues due to rising oil prices. He believes that if crude oil reaches $120, $130, or $140 per barrel within the next 30 days, it could lead to a significant drain on liquidity.
Wilson is concerned about energy costs starving the market of cash and is not worried about artificial intelligence (AI) having a major impact. He emphasizes that market liquidity is currently sufficient but not abundant.
Morgan Stanley is advising clients to rotate towards companies that generate cash internally rather than cutting equity exposure. The bank has also initiated coverage on Coinbase, setting a price target of $250 with an almost 43% upside potential from its current price of $175.26.