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

Strategist 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, July 10th at 2 p.m. in London.

Will there be a V-shaped economic recovery?

Probably no financial question is more important at the moment or more poorly defined

because there's no common definition of what a V-shaped recovery actually looks like.

At Morgan Stanley we use this term to describe our forecast that US and develop market growth

return to pre-recession levels by the end of 2021 that's faster than the

consensus expects and much faster than what we saw following the global financial crisis,

hence why we call it a V. But this is still 18 more months before growth returns to normal.

Even a V-shaped recovery is going to take some time.

That slog back would seem to stand in

contrast to the sharp rebound in financial markets who free to look ahead have roared

back from the lows. Global equities are up almost 40% since late March, raising a healthy amount of skepticism that markets have already run ahead of the economic fundamentals.

But there's just one problem with this conventional wisdom.

If markets are really pricing in a more optimistic

v-shaped economic recovery, they're going about it in a pretty odd way. Greater

optimism on the recovery should boost demand for smaller, more cyclical businesses

which have more gearing to economic

activity. It should reduce the discount for lower quality companies and credits as

...