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

Strategist for Morgan Stanley. Along with my colleagues bring you 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, January 24th at 2 p.m. in London.

There were many factors behind the markets rise last year, but one was that on a variety of

different quantitative measures investors often approach 2019 with a healthy

degree of skepticism. The optimism of investors measured by the American Association of Individual Investors, or

A. A. Double I remained well below average for most of 2019. The level of activity and

put options on stocks relative to call options, assigned investor pessimism was often above average.

And measures of optimism in equity's futures contracts or equity hedge funds was below average for much of 2019. The reasons for this we think were pretty straightforward

and were some of the same factors that led ourselves to be surprised by just how much markets

rallied to last year. For most of last year,

indicators of global growth continued to get worse. Earnings

failed to grow for the S&P 500 and fell for small US stocks and stocks

outside the United States.

Tariffs between the US and China rose.

Ratings downgrade activity and corporate credit markets increased.

A variety of warning signs of recession, including the yield curve, gave more worrying signs.

And for most of the last three months of 2019, valuations on global stocks and corporate bonds

reach levels rarely seen in the last 20 years.

The ability of markets to overcome these challenges was obviously due to a variety of factors.

In the first part of the year, valuations were still attractive,

...