Welcome to Thoughts on the market. I am Reza Mopadam, Morgan Stanley's chief economic advisor.

Along with my colleagues, we bring you a variety of market perspectives. Today, I'll be talking about the second wave of

COVID-19 lockdowns in Europe and the implications of the ongoing vaccine trials.

It's Tuesday, November 10th at 4 p.m. in London.

After a blissful summer lull, during which European economic activity and markets

recovered impressively, COVID numbers rose sharply in October.

With cases threatening to overwhelm health care capacity,

European leaders have had little choice but to reimpose lockdowns.

Some, like France, have gone as far as banning people from going out for non-essential business.

So what are the economic and market consequences of this

second wave and how does this week's vaccine announcement impact the picture?

Recall that when the pandemic first broke out in Europe in the spring,

European stock markets fell by more than 30%

and sovereign bond markets fragmented badly.

Corporate credit spreads reached levels last seen in the midst of the Euro area

sovereign debt crisis.

However, there are several reasons to believe that even in the absence of a vaccine, the economic and market impact of this second wave will not be as severe as the first one.

First, the lockdowns are not as strict this time. For example,

manufacturing, construction and education sectors are exempt from lockdowns.

Second, health systems are better prepared,

with a better understanding of COVID-19

and a better supply of medical equipment

...