Welcome and 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 a variety of perspectives,

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

It's Monday, February 1st at 11.30 a.m. in New York.

So let's get after it.

As noted last week, equity markets got up to a fast start in 2021,

as greed overcame fear in a way I've only witnessed a few times in my

30-year career. However, as usual during such strong bull runs both

institutional and retail investors have added leverage to their bets. In fact, a few weeks ago, we were at record

levels of leverage for hedge funds and record low cash balances for long-only institutions.

Meanwhile, retail investors have been buying record amounts of call options and using margin debt aggressively.

The prevailing view of better economic growth, more fiscal stimulus to come, and continued money printing

from the Fed has everyone all in.

What could go wrong?

Of course, that's exactly the kind of complacency

that leads to greater risk in markets even though it feels safer. It's the

mere image of last March when fear was rampant and the risk of investing

was actually very low. Such irony is one of the cardinal rules of investing was actually very low.

Such irony is one of the cardinal rules of investing.

Buy low, sell high, as they say.

While that seems simple enough, it's a hard rule to live by for many investors,

especially professional asset managers and have to frequently

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