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 into

financial marketplace it's Monday June 24th at 9 a.m. Eastern so let's get after it. While

last week was all about the Fed attention will now turn to this weekend's

G20 meeting in Japan and the growing hope

for a constructive meeting between President Trump and China's President Xi Jinping

looking back to last week's Fed meeting the Fed delivered on the growing

expectations for an interest rate cut sooner rather than later.

While the closely watched dot plot suggested the Fed doesn't plan to cut until next year,

the official statement in Chair Powell's press conference intimated that they are ready to cut at next month's meeting if necessary.

Stocks rallied sharply on Thursday with the S&P 500 in NASDAQ making new all-time highs.

Small caps rally too, but remain well below their

highs from last September along with the more cyclical areas like energy, financials,

materials and

industrials. In short equities continue to trade defensively even as the bellwether index makes new highs. That's typically not a great sign as it means the market is skeptical about something. We think its skepticism is about growth and it's warranted.

Looking ahead to this week's G20 meeting, we are also skeptical about any trade deal between the US and China.

While it does appear the two sides have become more open to further discussion, it's not clear that an agreement can be made that will change the trajectory of growth.

In particular, we have been very focused on corporate confidence as a leading indicator for where the economy is headed.

And on that score, we got some more bad news last week from the Philadelphia Fed Corporate

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