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 Monday, December 16th at 9 a.m. Eastern, so let's get after it.

Last week was perhaps the best week of the year for positive catalyst, a trifecta of sorts that included an

incrementally dovish Fed meeting, a phase one trade deal with China, and a win by the

Conservative Party in the UK general elections which clears a potential path toward

an orderly Brexit removing what has been one of the largest headwindwinds for global growth.

Unsurprisingly stocks had a strong week led by international markets and value stocks.

The two areas we continue to favor in our asset allocation and sector-style recommendations.

Having said that, there are competing dynamics that will influence the pace at which this continues.

With trade and Brexit, arguably the most important fundamental developments,

the rotation toward Japan, Europe, and technical stocks make sense, given these were the assets hurt the most by these. and global bull market that began in 2016, we aren't yet 100% sure that the

consolidation that began in 2018 is completely finished, as we see

competing dynamics that could offset some of the enthusiasm on bottoming global and U.S. growth.

First, we believe there was a significant pull forward of demand this year in certain items to be

tariffed on December 15th. With that threat now removed, we see some payback in the first quarter that may call

into question the pace of global recovery that is now priced. While our economic forecast for a first

quarter trough in global growth should be unaffected by the payback, we think it could cause

some doubts about the magnitude and timing of real acceleration.

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