Welcome to Thoughts on the Market.

I'm Mike Wilson, Chief Investor and Chief US Equity Strategist for Morgan Stanley.

A lot of my colleagues bring you a variety of perspectives.

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

It's Monday, May 24 at 11.30 a.m. in New York, so let's get after it.

Last week I discussed our newly published mid-year outlook.

This week I will provide some investor feedback to our key views and calls from that outlook.

Investors definitely more reception to our mid-cycle transition narrative that we introduced

a few months ago.

In short, there's an acknowledgement that something has changed in the market because

more investors are struggling to consistently make money as leadership flip flops day

to day.

Indeed, this is very consistent with the typical mid-cycle transition as the market struggles

to find the next consensus trade.

Second, while investors agree with our premise of a mid-cycle transition, they do not think

equity valuations need to fall by another 15% as we suggest.

While our view is also based on historical mid-cycle transition periods, many investors

think it's different this time because the Fed and other central banks have committed

to staying more dovish for longer than normal.

While we do not doubt the Fed's resolve in that regard, we believe a more dovish Fed

today just means they will need to tighten faster later.

We also think the equity market understands that and will discount it appropriately by

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