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, March 30th at 1 PM Eastern, so let's get after it.

In the past month we've experienced a full bear market down 20% and a full bull market up 20%.

Of course this volatility follows a period of calm during which we observed some of the lowest

volatility readings in history.

As noted by famed economist Hyman Minsky, the onset of a market collapse

can be brought on by the speculative activity that defines an unsustainable bullish period.

This is known as the Minsky moment.

Sound familiar?

If one accepts that the fourth quarter of 2019

resembled more of a speculative behavior driven by liquidity rather than the fundamentals,

the Minsky moment conclusion is not only compelling, but hard to refute.

Without a face to blame for the recession and the common enemy of the virus that everyone wants to defeat,

there are no governors on the amount of monetary or fiscal stimulus that will be used in this fight.

As an example, our economists now estimate a U.S. fiscal deficit of 18 percent, a level last seen during World War II.

Recessions don't just appear out of nowhere. No matter what the exogenous shock is that ends an expansion,

the conditions for a recession must be in place for that trigger to actually work.

More specifically, every expansion leads to excessive credit creation.

This time around it was in the corporate credit and

Shadow Banks which are unregulated financial intermediaries something I

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