Welcome to Thoughts on the Market.

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

Stanley.

A lot of my colleagues bring you a variety of perspectives.

I'll be talking about the latest trends in the financial marketplace.

It's Monday, April 19th at 11.30 a.m. in New York, so let's get after it.

Over the past few weeks, the economic data has been nothing short or remarkable.

While impressive, it's not really that much of a surprise, though, at least relative

to expectations, and ultimately, that's what matters for investors.

Furthermore, many data series are likely peaking from a rate of change standpoint.

In fact, the rally and bonds over the past few weeks has surprised many, but the reality

is that these strong data were already well understood by markets.

We've discussed this point in our research over the past few weeks, and in our view,

we're moving from early to mid-cycle in this recovery.

In fact, this transition is happening about twice as fast as we've experienced in prior

recessions and recoveries.

This also fits well with our view that this cycle will be different, most notably that it

will run hotter, but also shorter.

As such, there are implications for equity portfolio managers to consider.

In particular, we note our call to upgrade one's portfolio by moving up the quality curve

three weeks ago.

Indeed, high quality has started to outperform low quality, and we think this is going to

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