(Bloomberg) -- Softer US macroeconomic data suggest that earnings trends will weaken in coming months, contrary to the expectations of most analysts, according to Morgan Stanley’s Michael Wilson, a staunch Wall Street bear.

“Many of the leading macro data points that we focus on have fallen in recent weeks and are not pointing to a similar run rate in terms of strength looking forward over the next several months,” said Wilson. He was ranked No. 1 in last year’s Institutional Investor survey after correctly predicting the selloff in stocks in 2022, although his prediction of an equity slump in 2023 is yet to materialize.

Nearly 86% of S&P 500 constituents have reported earnings so far this quarter, with 79% of those companies beating estimates, according to data compiled by Bloomberg Intelligence. Wilson said stronger economic figures in January and February as well as reduced expectations going into the season have led to the strong beat.

The boost to earnings projected by analysts is contingent on improving margins, Wilson said. “We’re more skeptical as labor costs continue to be a headwind for corporates and our leading margin gauge points to additional margin downside and a muted recovery thereafter over the coming months.” On top of that, slowing inflation means pricing power will fade for corporates, he added.

That said, the strategist acknowledged that if economic data improve, the broadly expected earnings recovery could materialize, reducing the probablility of his below-consensus $195 base case for earnings per share in 2023.

©2023 Bloomberg L.P.