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 a financial marketplace.

It's Monday, July 13th at 1130 a.m. in New York, so let's get after it.

Since the March lows, equity markets and virtually all risk asset markets are up a lot.

The narrative we've been using to justify these moves has become more consensus at this point,

and quite frankly, valuations are pretty full, at least for the major indices and especially some of the assets most positively

affected by low long-term interest rates.

Truth be told, many individual stocks have corrected sharply over the past month. Even the vaunted S&P 500 has not been able to make a new high since June 8th,

which is almost five weeks ago.

Meanwhile, the Nasdak and China's main stock market

have broken out to new highs for the year and they appear unstoppable.

In the case of China, the excitement is partially due to the fact that they are barely seeing any new cases of COVID-19.

New waves are quickly extinguished with aggressive tracing programs and

testing. In addition, the Chinese authorities have recently stepped up efforts to

stimulate its economy and stock market even suggesting individual investors should get more invested.

In the U.S. the COVID-19 situation couldn't be more different.

New case counts have moved sharply higher with record new case counts being recorded almost every day over the past few weeks.

This is one of the reasons why most U.S. stocks and equity indices have not been able to make

new highs since early June.

It's also one of the reasons why the NASDAQ is powered higher even though the S&P 500 has not.

The NASDAQ is comprised mainly of tech and health care companies that are viewed as beneficiaries of the pandemic.

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