U.S. equities could decline another 22%, on top of their 19.4% decrease in 2022, warn Morgan Stanley strategists, led by longtime bear Michael Wilson.

Corporate profit estimates are too optimistic and the equity/risk premium, or projected returns, are at their lowest since the run-up to 2008, Morgan Stanley wrote in a research note, Bloomberg reports.

The S&P 500 could decline more than the 3,500-3,600 points the market has currently priced in, in the event of a recession, according to Wilson.

“The consensus could be right directionally, but wrong in terms of magnitude,” says Wilson, who believes the S&P 500, which opened at 3,946.54 Monday, could bottom at 3,000 points, a 22% decline.

Likewise, Goldman Sachs Group Inc. and Deutsche Bank Group AG analysts are worried about pressure on profit margins, higher U.S. corporate taxes and a recession.

In line with this, the MLIV Pulse survey of institutional investors shows they also believe the S&P 500 will weaken over the next few weeks.

Some Wall Street analysts are heartened by China opening up its economy due to COVID cases declining, as well as U.S. inflation peaking and relatively attractive stock valuations.

However, Wilson says, inflation helped some corporate profits and its decline, he maintains, “is very negative for profitability.”

Earnings season begins Friday with highly anticipated reports from big banks, including Citigroup and JPMorgan Chase & Co.