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, June 29th at 8.30 a.m. in New York.

So let's get after it.

2020 has been an unusual year that started with record low unemployment and equity markets making

new all-time highs just about every day.

In fact, in January and February, it was hard to find anyone who was negative on the economy

or the stock market.

In March, that all changed with the novel coronavirus turning into a full-fledged global pandemic.

The subsequent lockdown of the U.S. economy to fight the disease led to the most sudden and severe recession in history.

What followed next was unprecedented monetary and fiscal stimulus, which means we are likely to experience

one of the sharpest recoveries on record too.

Stock markets around the world seem to agree,

with most major averages trading extremely well.

Such a rally in stock prices has many people nervous that markets are disconnected from the fundamentals and do not reflect the still looming risks.

But equity markets move well ahead of the economy and are often the best leading indicator.

In short, we think the V-shaped recovery in markets is foreshadowing what will be a V-shaped recovery in the economy and earnings.

In fact, one thing investors may be overlooking is how fast earnings often rebound after recession.

The main feature of any recession is that unemployment rises sharply.

In the current case, unemployment went from a record low 3.5%

to almost 15% in just two months.

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