Bullish as earnings revisions notch higher, says Morgan Stanley's Mike Wilson

Market Outlook - Morgan Stanley is not bullish due to geopolitical conflicts, but because earnings revisions have meaningfully turned up since mid-April [3] - The market seems comfortable with the current geopolitical situation, but escalation could change this [3] - A 5% to 7% correction type of event is anticipated for now, vigilance is required [10] Earnings and Economic Momentum - Earnings revisions made a significant trough in April, indicating economic momentum [4] - The rate of change on earnings revisions, fiscal policy, tariff policy, and immigration are creating opportunities in the equity market [6] - AI capex has bottomed, contributing to the opportunity [6] Investment Strategy - Long positions are favored in capital goods companies, financials, and software [12] - Short positions are favored in consumer goods and consumer discretionary sectors [12] - Small caps are expected to continue to underperform due to high interest rates [13]