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, April 27th at 10 a.m. Eastern, so let's get after it.

Everything goes in cycles and the US economy is no exception.

With the prior economic expansion lasting over 10 years,

some market pundits were making the claim in January that the business cycle had been

repealed, or at least muted.

We now find ourselves in the midst of the steepest recession on record.

Most will blame this recession exclusively on the coronavirus,

even naming it the COVID-19 recession.

However, the virus was just a trigger for a recession that was already approaching

thanks to the excesses that had been building for years.

In other words, recessions don't appear out of nowhere.

The conditions for one must already be in place.

Much like business cycles inevitably ebb and flow, the excesses tend to alternate between the

consumer and corporate segments of the economy.

Last cycles excesses were centered on the corporate rather than the consumer sector

with corporate debt reaching all-time highs,

thanks to financial repression and below market interest rates.

In an era of secular stagnation, companies were happy to lever up in an effort to generate

better earnings growth.

...