Welcome to Thoughts on the Market.

I'm Mike Wilson, Chief Investment Officer and Chief U.S. Equity

strategist for Morgan Stanley.

A lot of my colleagues bringing you a variety of perspectives, I'll be talking about the

latest trends in the financial marketplace.

It's Monday, October 7th at 9 a.m. Eastern, so let's get after it.

For the past 20 months, global equity markets have made little progress with most indices down more than 10% from their all-time

highs, reached way back in January 2018.

Meanwhile, bonds have performed exceptionally well over this period delivering outsized returns.

Many investors have focused on the S&P 500 as the key equity benchmark for the direction of the economy and earnings.

However, the reality is that the S&P 500 is a very defensive equity market, and it tends to outperform when the

fundamentals deteriorate. Also if you look at what sectors and kinds of

stocks have done best over the past 20 months it's areas like utilities,

reets, consumer staples, software and services.

What these sectors have in common is that they are either defensive or high quality and they tend

to do well when the risk of a recession is rising.

Last week we got more data supporting our view that the global and U.S. economies are still

slowing and even showing signs of recession in many regions.

These data have been disappointing for close to 18 months, and this is why bonds have

traded so well while stocks have not, with the exception of more defensive indices and

sectors.

For whatever reason, many pundits have glossed over these facts, and have continually tried to call for a break higher in equity markets over the past year,

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