Welcome to the thoughts on the market. I'm Michael Zezes, head of Public Policy Research and Municipal Strategy for Morgan Stanley.

Along with my colleagues bring you a variety of perspectives, I'll be talking about the intersection between U.S. public policy and financial markets.

It's Wednesday, June 17th at 1130 a.m. in New York.

Morgan Stanley's strategy and economic teams this week released their mid-year outlook.

Our team continues to see a V-shaped economic recovery, meaning the recession was sharp, but

likely short.

Consequently, the outlook remains bright for risk assets, namely corporate credit and equities.

But this view in part hinges on a key view of hours,

that Congress and the President will deliver another round of fiscal stimulus this

summer, building on the CARES Act from the spring.

It's a position we have confidence in,

but let's check some potential blind spots in the form of two common pushbacks we've been hearing.

The first is that it's an election year,

and the platitude is that election years are too political

to get big pieces of legislation done.

We don't see the wisdom in that logic, and while fiscal expansion and divided governments

is rare, it is common as a reactive measure to a recession.

So we see scope for parties to focus on

areas of agreement adding up to about a trillion dollars of spending. The

second pushback comes from recent news that Senate Republicans want to

wait to start negotiating another round of stimulus.

This wait and see approach is based on the idea that the economic recovery may be strong enough that more stimulus isn't necessary.

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