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Morgan Stanley thinks the S&P can reach 2,700 within a year. Here’s why.

Americans univesting in their businesses because of political uncertainty

The might just hit 2,700 in 12 months because of a largely ignored global recovery, Morgan Stanley strategist Mike Wilson said Friday on CNBC.

The economy is recovering, said Wilson, with Brexit and various European referendums being "distractions" from the core of the story: strong, GDP-driven sales growth that might be sustainable for several more quarters.

"The earnings story is still underappreciated," Wilson said on CNBC's "Halftime Report."

The secret to Morgan Stanley's bullishness is in an uptick in nominal GDP around the world, which is fueling strong earnings that will push the S&P higher, he said.

"The earnings story is still underappreciated," said Wilson. He calls it "the best sales growth we've had in five or six years," and it should be sustainable for several more quarters.

There were some missteps from Morgan Stanley, said Wilson, citing their overweight position on energy. However, "with [the current] pullback, they're right where they should be."

"We were concerned that energy stocks had shot ahead of what the actual revisions had been, said Wilson. "We jumped the gun."

However, Morgan Stanley's optimism hinges on whether the Trump administration can push through tax reform. "For 2017, I'm highly confident there's no tax benefit built in," said Wilson. This gives the Trump administration a three-month window to pass tax reform by the fall.

Tax reform is crucial to continued growth in the S&P, he said. "No doubt we need to see progress on tax by August or September to get the full move to 2,700," he said.

That would be a 13 percent gain from Friday afternoon.