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 ideas together.

It's Thursday, January 21st at 2 p.m. in London.

A new year, a new presidential term.

Both events over the last few weeks are long-standing traditions for passing from the old to the new,

of looking back and looking ahead.

And both served as a useful and necessary reminder.

It's a new year and the U.S. has a new president, but most of the themes and challenges

face in the market appear exceedingly familiar.

Thematically, 20-20 ended and 2021 begins with a market focus on reflation and rotation. By reflation I mean the idea that growth

could end up being stronger than expectations and lead to a faster recovery of inflation back to

more normal levels around 2%. By rotation, I mean the ongoing and

broadening shift in what is leading the market, a theme my colleague Mike Wilson

discussed on this program on Monday. While the S&P 500 is up about 3% year to date,

small cap stocks are up almost three times that, a sign of shifting market leadership.

Reflation and rotation often take hold following recession.

We think they remain important themes for this year.

But while these themes are familiar, so are the risks. we think they remain important themes for this year.

But while these themes are familiar, so are the risks.

Investors we speak to are worried about expensive valuations,

...