Welcome to Thoughts in the Market.

I'm Andrew Sheets, Chief Cross-Asset Strategist for Morgan Stanley.

Along with my colleagues, Spring Year Variety of Perspectives, I'll be talking about trends

across the global investment landscape and how we put those ideas together.

It's Friday, March 12th at 2PM in London.

At Morgan Stanley, we think global growth will exceed expectations in 2021, but we also

think that emerging market assets, both stocks and bonds, will generally underperform.

From the surface, that seems inconsistent.

After all, emerging market economies tend to be more volatile and more cyclical.

Many also produce commodities that are quite sensitive to economic demand.

If global growth is going to recover more than expected, such countries would seem quite

well placed to benefit from that upswing.

Get there some nuance here that's important.

The first is what's driving that upswing, and the second is the nature of emerging market

assets that most investors buy.

Let's start with that upswing.

The recent passage of the 1.9 trillion American Rescue Plan, it appears increasingly clear

that the US economy will be at the leading edge of a global recovery.

But that creates some complications for emerging markets.

Better US growth should mean higher US interest rates, something that EM economies can be quite

sensitive to.

Those higher interest rates also make the US dollar more attractive to hold, putting downward

...