Welcome to Thoughts on the Market. I'm Andrew Sheets, Chief Cross Asset

Strategy from Morgan Stanley. Along with my colleagues bringing a variety of

perspectives, I'll be talking about trends across the global investment

landscape and how we put those

different ideas together.

It's Friday, August 23rd, at 2 PM in London.

We're cautious on the market and as discussed on this program, one of the reasons is our concern

that global growth is slowing

and the risk of a recession is rising. Many of those who disagree with our

assessment say that we're too focused on data link to trade and industrial

activity and not focused enough on a stronger consumer, especially in the US.

Indeed, stocks rallied on Wednesday after several US retailers reported strong second quarter results.

I wanted to talk about this debate and why we're less optimistic.

Consumers matter because they make up the bulk of economic activity.

Regular people buying things accounts for about 70% of the U.S. economy.

An optimist note that statistics for these consumers currently look good.

Unemployment is low, house prices have been rising, and interest rates have fallen.

Most directly, consumers say they feel confident,

with surveys of consumer confidence back to highs's last seen in November 2000.

With such a large part of the economy appearing in good shape, why are we focused on weaker data

related to trade and industrial activity, which reflects a much smaller share of the pie.

The first reason is that while the industrial sector of the economy is smaller than the consumer sector,

...