Welcome to Thoughts on the market. I'm Chetanaya, Chief Economist and Global Head of Economics for Morgan Stanley.

Along with my colleagues bringing you a variety of perspectives, I'll be talking about the latest trends in the global economy and how

we should interpret them.

In my last episode, I laid out our view on why we are thinking the global economy will

be on a recovery path driven by simultaneous easing in macro policies and trade tensions.

Although trade tensions are still the key swing factor for the 2020 outlook,

there's another key point that I would like to cover today.

And that's the improving data in the global manufacturing cycle.

First of all, let me contextualize why the manufacturing cycle matters so much for the current global cycle.

The downturn that we saw was due to trade tensions which in turn drove a deep cyclical slowdown

in trade and manufacturing sectors.

So to the extent that it was a key driver to the

slowdown, its uptan would also be indicative of a broader upswing in the global

economy. It is in that context that we are intensely focused on the soft and hard data related to these in

determining the inflection point in this cycle. Let me get to the hard data points first.

We have moved out from continuous deterioration to now stabilization.

Interestingly, the two key sectors of technology hardware products and autos, which are the

key drivers of global manufacturing and the trade cycle, the end demand for these products have started

to show an improvement.

More importantly, the soft data points which typically tend to lead have already turned

upward decisively. Manufacturing sentiment as measured by the Global Purchasing

Managers Index or PMIs have improved in November the first time in seven months.

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