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 in the financial marketplace.

It's Monday, June 7th at 11.30 AM in New York, so let's get after it.

With first quarter earnings season now over, investor attention has turned back to the

macro, with a particular focus on data that will tell us if the current inflationary

spike is transient or not.

As discussed in my last podcast, inflation has become the most discussed topic with clients

for two reasons.

First, it will play a large role in when the Fed decides to begin tapering as asset purchases,

and second, it will determine if the rotation from growth the value stocks will continue.

Last week's jobs report was an important piece of the puzzle that was supposed to help

us decide.

The headline number was a bit light, but close enough to the consensus to avoid a panic

about last week's very weak payroll number.

Offsetting this modestly disappointing payroll number were hourly wages that came in materially

higher than the expected at 2% year-over-year growth.

While not extraordinary in the context of the Fed's 2% inflationary target, it comes

against very difficult comparisons from last May.

In other words, the absolute number is high for labor costs.

In fact, when we look at these data relative to 2019, it appears that the pandemic shifted

...