Welcome to thoughts on the market. I'm Mike Wilson, Chief Investment Officer and Chief

U.S. Equity Strategist for Morgan Stanley. Along with my colleagues bringing you a variety

of perspectives, I'll be talking about the latest trends in the financial marketplace.

It's Tuesday, May 26 and 1130 a.m. in New York, so let's get after it.

Economies move in cycles. However, these cycles only matter for financial markets at turning points, because most of the time the economy is in an expansion phase.

Such turning points include periods when growth accelerates or decelerates but the economy is still expanding.

Economic recessions are different however.

These are periods when growth is actually negative and the economy is shrinking.

Recessions are also rare, occurring just once per decade in the U.S.

Therefore it makes sense that a good part of our investment strategy research centers around

cycle analysis.

We find it very useful and profitable when properly interpreted.

As discussed over the past few months when it becomes obvious to everyone we're entering

an economic recession, that usually marks the end rather than the beginning of the bare market.

In fact, we've shown in our research just how similar this cycle has been to prior

recessions with respect to financial markets.

Of course, all economic cycles are unique in some way, too, which can affect the rate and

sustainability of the recovery while also determining both new opportunities and areas ripe for

disappointment. With respect to this recession,

we think the primary differentiating feature

is the nature of the exogenous shock that triggered it.

The pandemic provides a faceless villain

...