Welcome to Thoughts in the market. I'm Andrew Sheets, Chief Cross Asset Strategy

for 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 ideas together.

It's Friday, November 13th at 2 p.m. in London.

My favorite stories in financial markets involve widely believed statements that simply are not true.

I'd like to talk about one of these myths today, the idea that very aggressive Central Bank policy is artificially

suppressed market volatility.

I don't think this is right.

The last several years have actually seen high levels of

volatility in the equity and credit markets. High levels that going forward we think

can decline. When talking about central banks and market volatility one often hears something like the following.

In the aftermath of the Great Recession, Central Banks intervened aggressively in financial markets.

This intervention overwhelmed all other factors, introducing an unusual, unnatural, and artificial

com to the stock market.

It's been smooth sailing, but only because of Central Banks.

But as widely believed as this idea is, the data says something different.

Since 2010, a period that is generally seen aggressive Central Bank support for markets,

the S&P 500 has consistently experienced more volatility than it did between 2004 and 2007, a period

with no such central bank assistance.

Meanwhile, 2020 has seen some of the highest levels of market volatility on record, despite some of the largest

Central Bank interventions on record. Clearly, there's a lot more to this story.

Indeed, while Central Banks are important forces in the market, the last decade shows that the underlying

...