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

U.S. Equity Strategies for Morgan Stanley. Along my colleagues bringing you a variety of

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

marketplace. It's Monday, November 4th at 9 a.m. Eastern, so let's get after it.

Last week there were two significant events for financial markets. First, the Fed's

decision on interest rates

Wednesday and second the October Labor report on Friday. On the first

score the Fed delivered with the market expected, another 25 basis point cut to

interest rates but with a strong signal that this will be the last cut for a while,

unless the economic data deteriorates further.

Equity markets sold off modestly on the news while Treasury bonds rallied sharply.

The equity sell-off was to be expected because stocks rallied significantly

into the Fed's meeting anticipating a cut, and if the Fed is truly done cutting for now,

then the rally might be over. The bond rally, meaning

interest rates lower, also makes sense in this context. There could be some

concern that the Fed is done, and maybe they shouldn't be so confident that the

economy will rebound.

In other words, there appear to be more skepticism in the bond market than the stock market

that the Fed is really done cutting interest rates.

On the second score, the October jobs data was unequivocally better than expected given the general

motor strike over the past month that was supposed to hit the headline numbers.

Instead, the economy created a very impressive 128,000 new jobs in October.

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