Bloomberg News is reporting it has seen a research note by Morgan Stanley’s chief US equity strategist, Michael Wilson, which predicts US equities will experience much sharper declines than the most pessimistic projections are predicting.

In the note, Wilson said the recession was going to exacerbate the largest yearly decline equity markets have seen since the global financial crisis of 2008. Wilson also predicted the S&P 500 could fall much lower than the present estimates of 3,500 to 3.600 points, if there is a mild recession.

He said, “The consensus could be right directionally, but wrong in terms of magnitude,” adding the index could bottom around 3,000 points, leaving it 22% off current levels.

He added however that while bond markets would be boosted by a peak in inflation, “it’s also very negative for profitability.” He went on to note that he expects margins will continue to disappoint investors through 2023.

At Goldman Sachs, analysts are predicting that the positive effects produced by the reopening of China will be overshadowed by profit margin pressures, as well as changes to corporate tax policies in the US and the looming global recession.

Deutsche Bank Group analysts are also predicting US earnings will decline during 2023, however US stocks could rally in the fourth quarter reporting season, due to low investor positioning, combined with a year-end selloff.