Welcome to Thoughts on the Market.

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

strategies 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, July 15th at 8 a.m. Eastern, so let's get after it.

For the past 18 months, our call on U.S. equities has been very consistent.

After a massive bull run from April 2013 to January 2018, we suggested the U.S. equity market was

about to enter a multi-year consolidation during which the S&P 500 would trade in a wide range between 2,400 and 3,000.

Since then, that range has defined the price action well.

With the lows in December coming in around

2350 accompanied by several attempts at 3,000 on the upside that ultimately

failed. We now find ourselves at the upper end of that resistance level once again, with a marginal break

above 3,000 last week.

And just like January and September last year, there appears to be growing excitement about

the possibility of a surge to even higher levels.

Each successive attempt to break out over the past 18 months has been for different reasons.

In January 2018, it was about tax cuts and the extremely positive impact that had on

earnings revisions for 2019 and beyond.

We argued at the time that the market had already discounted these revisions back in December of 2017 with the highest PE multiple and the lowest equity risk premium on the S&P 500 witnessed since the late 1990s.

Indeed, the equity market promptly rejected that first attempt at

3,000 with the most dramatic jump in equity volatility since the global recession of

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