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The Next Stage of the Market Correction
26 oktober 2026 · 5 min
Is the end of the correction in sight? Our CIO and Chief U.S. Equity Strategist looks at what could bring this pullback to an end. Lees meer
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----- Transcript -----
Welcome to Thoughts on the Market. I'm Mike Wilson, Morgan Stanley’s CIO and Chief U.S. Equity Strategist.
Is the end of this equity market correction in sight? Today on the podcast, I’ll share what I think could turn the tide.
It's Monday, October 26th at 11:30 am in New York.
So, let’s get after it
The correction that began in June is now well advanced beneath the surface. But I believe the high-quality S&P 500 index may still have some unfinished business. Until that plays out, I don’t think we can say the adjustment is complete.
The real question to ask: how bad does it have to get before it gets better?
We have described this correction as a classic mid-cycle transition. The peak rate of change in earnings revisions arrived right on schedule, about a year after the recession troughed. And the market responded the way that it usually does: early-cycle leaders with more operating and financial leverage started to underperform, while higher-quality, asset-light, services-oriented businesses moved to the front.
This quality rotation is now well understood though, and positioning has followed it. Ironically, the final step is usually a convergence between the resilient high quality S&P 500 index and the weaker breadth beneath. We may already be seeing the beginning of that meeting in the middle. If the index does move lower, I believe 7100-7200 on the S&P 500 is where the correction should find material support.
The reason I believe we will ultimately have a positive resolution to this transition is that a lot of damage has already occurred. Roughly 60 percent of Russell 3000 stocks are down more than 20 percent since June. And the hit has been even more severe in early-cycle areas like Semiconductors, Autos, Consumer Cyclicals, and Capital Goods.
At the same tim…
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One Global Shock, Different Rate Paths
23 oktober 2026 · 12 min
The energy shock is global, but the policy response isn’t uniform. In the second of our two-part roundtable, our economists unpack the forces shaping interest rates across the U.S., Europe and Asia. Lees meer
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----- Transcript -----
Seth Carpenter: Welcome to Thoughts on the Market. I'm Seth Carpenter, Morgan Stanley's Global Chief Economist and Head of Macro Research.
Michael Gapen: I'm Michael Gapen, Chief U.S. Economist.
Jens Eisenschmidt: I'm Jens Eisenschmidt, Chief Europe Economist.
Chetan Ahya: And I’m Chetan Ahya, Chief Asia Economist.
Seth Carpenter: Yesterday, we talked about why global growth is continuing to power on, why investment is playing a larger role, and how that investment cycle is spreading across regions.
Today, we're going to take a deeper dive and think about monetary policy and what's going on.
It's Friday, October 23rd, at 10am New York.
Jens Eisenschmidt: 4pm in Frankfurt.
Chetan Ahya: And 10pm in Hong Kong.
Seth Carpenter: When I look around the world and think about especially developed market central banks, well, they're kind of all tightening at the same time – but maybe for somewhat different reasons.
Let's start with just a really broad policy question. Why are the Fed, the ECB, the Bank of England, and the Bank of Japan all tightening policy when their economies look so different?
Mike, I'm going to start with you back here in the U.S. with the Fed. How are you thinking about what the Fed is doing right now?
Are they just recalibrating the stance of policy? Or is this a fundamental change where they're trying to rein in growth in the economy?
Michael Gapen: The way I look at it is this is a story about persistent inflation, and I would look at it as a recalibration of policy. I think the majority of participants on the FOMC know the Fed can't pump more oil or get, you know, oil through the Strait of Hormuz. So, it's about leaning against second-round effects.
Inflation is gradually mov…
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Economic Roundtable: What’s Keeping Global Growth Going?
22 oktober 2026 · 15 min
In the first of a two-part discussion, our roundtable explores how AI investment, trade and consumer spending are sustaining global growth, and what could put that resilience at risk. Lees meer
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----- Transcript -----
Seth Carpenter: Welcome to Thoughts on the Market. I'm Seth Carpenter, Morgan Stanley's Global Chief Economist and Head of Macro Research.
Michael Gapen: I'm Michael Gapen, Chief U.S. Economist.
Jens Eisenschmidt: I'm Jens Eisenschmidt, Chief Europe Economist.
Chetan Ahya: And I'm Chetan Ahya, Chief Asia Economist.
Seth Carpenter: And today, our fourth quarterly economic roundtable discussion is going to try to take a wide-angle view on the global economy – and it has held up despite higher interest rates, higher energy prices, geopolitical uncertainty, you name it.
It's Thursday, October 22nd at 10am in New York.
Jens Eisenschmidt: And 4pm in Frankfurt.
Chetan Ahya: And 10 pm in Hong Kong.
Seth Carpenter: All right then. Let me start with that big question Why has global growth held up better than maybe would have been expected given everything that we've seen ?
Mike, maybe I'll start from the U.S. perspective with you. What do you think has mattered most? What is driving – if I dare use an overused word – the resilience of the economy?
Michael Gapen: Most of us believe AI-related spending is interest rate insensitive and geopolitically insensitive. And certainly, I think the data has borne that out. And in the direct translation of AI hypercaler Capex spending to growth, we find that AI is accounting for 4/10 to 6/10 contribution to growth in any given quarter. You could nudge that a little higher if you think it’s creating productivity, which we do.
And that spending is underpinning asset market appreciation – or certainly has for the past several years. And that is underpinning resilient spending by upper income households.
So, I think in the U.S. the clear answer is AI-related spending, but also its lin…
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Inside the Biggest Bond Boom in Years
21 oktober 2026 · 13 min
Can markets absorb this much new debt? Our panel examines strong demand for investment-grade bonds, stress in high-yield debt and the macro risks that could shape the next six to twelve months in credit markets. Lees meer
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Andrew Sheets: Welcome to Thoughts on the Market. I'm Andrew Sheets, Global Head of Fixed Income Research at Morgan Stanley.
Anish Shah: I'm Anish Shah, Global Head of Debt Capital Markets.
Rehan Latif: I am Rehan Latif, Global Head of Credit Trading.
Samer Oweida: And I'm Samer Oweida, Global Head of Foreign Exchange and Emerging Markets.
Andrew Sheets: Today, a discussion of historical levels of bond issuance and how it could affect the broader markets.
It's Wednesday, October 21st at 9am in New York.
Gentlemen, it's great to talk with you. I think what we're talking about is an issue that really cuts across all parts of Morgan Stanley's businesses, from issuance to credit trading to macro markets and beyond.
And I'd like to get into it, but just quickly to kind of frame where we are. Anish, we are in the midst of a historic investment cycle in AI CapEx. We're in the midst of a very large pickup in M&A activity that I also want to make sure we get into.
But you sit at the intersection of our capital markets businesses. Talk a little bit about what we're seeing in the bond issuance space.
Anish Shah: Sure, Andrew. I look after all of our new issue capital markets business in credit, and that's across the credit spectrum and across geographies. And I'm constantly looking to Rehan for the latest in investor sentiment and how we can deliver the right product for our issuing clients. And to Samer on macro views that impact our clients every day.
We are in the midst of a significant decommoditization of new issue credit markets and a decompression in credit. It's really driven by four important factors.
One is, as you note, unprecedented levels of issuance. Investment grade debt volume…
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AI’s Next Winners: Signals From Private Markets
20 oktober 2026 · 10 min
With AI startups scaling at record speed, our analysts Sabrina Hao, Adam Wood and Brian Nowak share takeaways from Morgan Stanley's Spark Conference on AI returns, competitive moats and implications for public markets. Lees meer
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Sabrina Hao: Welcome to Thoughts on the Market. I'm Sabrina Hao, Morgan Stanley's AI and Tech Thematic Equity Strategist.
Adam Wood: And I'm Adam Wood, Head of U.S. Software Research at Morgan Stanley.
Brian Nowak: And I'm Brian Nowak, Head of U.S. Internet Research.
Sabrina Hao: Today, what private companies are telling us about the AI opportunity and what it means for public markets.
It's Tuesday, October 20th, at 10am in New York.
Last week, we were at our Spark Private Company conference in California, bringing together more than a hundred startups across software, robotics, AI infrastructure, and beyond. There was even a company helping to manufacture pharmaceuticals in space.
It was a really interesting week to be at the conference given everything that was happening in the market. But really, we came away feeling even more positive about the AI cycle.
While public market investors are waiting for returns to justify trillions of dollars in AI spending, we're already seeing that pay off in private markets. AI demand is real, companies are delivering tangible returns for customers, and startups are scaling faster than ever.
Adam, let's start with growth. We heard from startups scaling at extraordinary speeds. One was approaching [$] 4 billion in annual recurring revenue in two years, another reaching a billion in under a year.
What really stood out to you about the pace of AI adoption, and why aren't we necessarily seeing that same growth at established software companies?
Adam Wood: So yeah, absolutely, the pace was remarkable. And clearly one of the standouts from the conference when we used to discuss how quickly a company could get to a $1 billion so-called unicorn va…
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A Narrower Path for Growth and Stability
19 oktober 2026 · 5 min
Higher rates can take time to filter through the economy, making their full impact difficult to judge. Arunima Sinha from our U.S. and Global Economics teams considers where the pressure may emerge next and how policymakers could navigate the competing risks. Lees meer
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----- Transcript -----
Welcome to Thoughts on the Market. I'm Arunima Sinha, from the Morgan Stanley’s U.S. and Global Economics teams.
Today, I'll talk about what rising rates mean for economic activity, inflation, and the policy path.
It’s Monday, October 19th, at 10am in New York.
The FOMC raised rates in September. But expectations for future hikes remain volatile. Within hours of the latest CPI print, markets round-tripped, pushing the probability to even for an October hike before retreating.
Now, consistent with our baseline forecast, the market assigns December the highest likelihood for the next hike. But moves further along the U.S. curve matter even more; notably the 10-year yield shifted.
One question that arises, taking a step back is – how much we should worry that broad-based inflation upside means tighter policy is required to push down inflation and, therefore, growth? Or have financial conditions tightened enough on their own that the central bank has less, not more work to do?
The calibration of monetary policy has always been difficult, and now it is becoming urgent.
Economists try to put the level of interest rates into the context of where they stand relative to the economy's natural rate. Stronger productivity growth and investment demand should mean a higher natural rate, so a given level of rates is less restrictive.
The rise in long-term treasury yields alongside still firm growth and earnings expectations is an indication that the neutral rate may indeed be higher. When yields rise because growth prospects are improving, expected returns rise and the demand for capital strengthens. In that setting, higher rates are not necessarily co…
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AI Boom Faces a Higher-Yield Roadblock
16 oktober 2026 · 4 min
Our ABS Strategist Carolyn Campbell explains how rising borrowing costs are slowing the AI data center boom and what could drive a rebound in financing. Lees meer
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Carolyn Campbell: Welcome to Thoughts on the Market. I'm Carolyn Campbell, Morgan Stanley's Asset-Backed Securities Strategist.
Today, why the AI boom is running into an unexpected obstacle: the cost of borrowing money.
It's Friday, October 16th, at 10am in New York.
Demand for data center facilities is booming. Yet even as companies race to build more capacity, the financing for them is becoming increasingly expensive. And that tension is creating an interesting story in credit markets.
Since January, five-year Treasury rates have climbed more than one percentage point, and spreads for data center assets have also gone wider. At the beginning of 2026, the highest-rated data center bonds offered yields below 5 percent. Today, similar bonds are yielding closer to 7 percent, and that increase matters enormously for companies trying to finance multi-billion-dollar facilities.
Many operators turn to the securitized credit markets to raise money. Essentially, they issue bonds backed by the income generated by their data centers. By the time these bonds are issued, construction on the data center is complete, the power is secured, and the rent is already being paid.
So, on the one hand, cash flows are stabilized – but there is a catch. These facilities often sign long-term leases well before they seek financing in the securitized credit market.
By the time they're ready to issue these bonds, rental income is already locked in. And so, when interest rates rise quickly, as we've seen this year, and these borrowing costs increase, revenues aren't necessarily keeping pace.
Our analysis suggests that when borrowing costs approach 8 percent, issuing these bonds becomes significantly more challenging under these current financing terms. And we're already …
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The Missing Piece in Latin America’s Bull Case
15 oktober 2026 · 4 min
Our Chief Latin America Equity Strategist Nikolaj Lippmann explains why Brazil’s election, the cost of capital, AI investment and geopolitics could help unlock a new era of growth across Latin America. Lees meer
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Welcome to Thoughts on the Market. I'm Nikolaj Lippmann, Morgan Stanley's Chief Latin America Equity Strategist.
Today – why Brazil could be the missing piece of what we call LatAm Spring, and what AI has to do with it.
It’s Thursday, October 15th, at 10am in New York.
Brazilian equities rallied sharply last week after a surprising first-round presidential election result. Flávio Bolsonaro finished ahead of President Lula, setting up a runoff later this month. The outcome remains uncertain. But for investors, I think there’s a bigger question. Can Brazil approach a policy shift that unlocks something the country has lacked for years: investment.
We've long argued that Latin America is moving from a consumption-led economy towards an investment-led cycle, thanks to: 1. Changing geopolitics; 2. investment-friendly policies; and 3. The potential for lower interest rates. What's more, this fits into the framework of the AI CapEx cycle, driving the global and especially the U.S. economy that has moved from consumption to CapEx, as argued by Mike Gapen, our U.S. economist. We're already seeing signs of this LatAm Spring in Argentina, Chile, Peru and Colombia. Brazil could be the largest missing piece. And there are three reasons why.
First, the cost of capital. Brazil remains one of the world's most expensive places to invest. High government debt and elevated interest rates have made fixed income investment more attractive than equities or entrepreneurial risk-taking. But credible fiscal reform could change that equation. Lower government spending could reduce borrowing costs, strengthen the currency, and encourage private investment. Which means capital could shift from sitting in fixed-income assets …
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What to Expect From the UK Budget
14 oktober 2026 · 8 min
The UK budget arrives later this month amid competing predictions about growth, inflation and public finances. Andrew Sheets and Bruna Skarica examine how the country’s economy defies expectations. Lees meer
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Andrew Sheets: Welcome to Thoughts on the Market. I'm Andrew Sheets, Global Head of Fixed Income Research at Morgan Stanley.
Bruna Skarica: And I'm Bruna Skarica, Morgan Stanley's Chief UK Economist.
Andrew Sheets: Today, the UK makes a budget. Why it matters? And more generally, what we've gotten right and wrong about the country.
It's Wednesday, October 14th, at 2pm in London.
Bruna, it's great to be here talking with you, and I'd like to get into a bigger discussion on the UK and what we've gotten right and wrong about the direction of the country this year. But more immediately, it has a very big event coming up.
What is the budget, and why is there so much focus on it?
Bruna Skarica: The budget is the UK's key fiscal event. It is the time of year when the Chancellor receives a refresh of economic forecasts and decides whether he needs to respond to these, whether there's any spending cuts or increases that are required, and whether there's any tax hikes or potentially tax cuts that are required too. All with the view of ensuring fiscal consolidation and executing on what is a self-imposed fiscal framework.
Here in the UK, the main target for the Treasury is to achieve current budget balance in year three of the forecast. The fiscal watchdog forecasts five years of economic variables, and the idea is, by the third year, we ought to be spending outside of investment expenditure as much as we're receiving in tax receipts.
So, all of that happens once a year in the budget.
Andrew Sheets: Now, I might just stop you there [be]cause in the context of these other budget pictures that we see around the world – the U.S. is running a large budget deficit, France is running a large budget deficit, Japan'…
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Asia Fixed Income Needs a Bigger Map
13 oktober 2026 · 5 min
Our Head of Asia Credit Strategy Kelvin Pang explains why investors would benefit from a broader fixed income market in Asia, with opportunities across more countries, local-currency credit and dollar-denominated bonds. Lees meer
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----- Transcript -----
Welcome to Thoughts on the Market. I’m Kelvin Pang, Head of Asia Credit Strategy [at] Morgan Stanley.
Today – why the challenge in Asia fixed income may not be the region at all, but the way investors have traditionally looked at it.
It’s Tuesday, October 13th at 8am in Hong Kong.
Picture this. You’re shopping in a supermarket. As you walk down the aisles, you notice half of them are off limits. It’s unexpected.
Something similar has happened in Asia fixed income. The region’s fundamentals remain supportive, but the traditional investment universe has become increasingly constrained.
The pressure began in early 2023, when U.S. policy rates rose above those in much of Asia for the first time since before the Global Financial Crisis. The environment that had supported Asian bond markets for years turned upside down.
Consider Asia-dollar credit. Issuers have increasingly turned to cheaper local-currency financing, which is shrinking dollar-bond supply. Asia-dollar credit is now on track for a fifth straight year of negative net supply. At the same time, investment-grade spreads have tightened to 55 basis points. That makes Asia investment-grade credit the most tightly valued major credit market globally.
And investors have taken notice of this. Assets in dedicated Asia credit and high-yield funds have fallen 62 percent from their 2021 peak – from roughly $75 billion USD to around $29 billion USD.
But we feel Asia itself is not the problem. In fact, Asia Pacific nominal GDP could rise from $41 trillion USD in 2025 to [$]54 trillion by 2031. That would account [for] roughly one-third of global nominal GDP growth over that period.
And most importantly investment is also acceleratin…
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The Politics of Powering AI
12 oktober 2026 · 5 min
Energy costs are a key election issue and AI data centers are adding to the debate. Our Head of Public Policy Research Ariana Salvatore looks at policy discussions in Washington that could determine how the U.S. powers its next technological boom. Lees meer
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Ariana Salvatore: Welcome to Thoughts on the Market. I'm Ariana Salvatore, Head of Public Policy Research at Morgan Stanley.
Today, I'll discuss the growing energy demands of AI and what the government can do in response.
It's Monday, October 12th at 10am in New York.
Markets and policymakers are preparing for a potentially important debate following the November elections. The future of American energy infrastructure. And at the center of that debate is an increasingly urgent question: How can the U.S. build enough power infrastructure to support the AI investment cycle – without passing the costs on to everyday electricity consumers?
Late last month, lawmakers in Congress introduced the bipartisan American Affordability and Jobs Act. That legislation represents a significant effort to reform federal permitting. But importantly, it also includes provisions that require data centers to cover the transmission costs associated with their projects.
We think that's a notable development, particularly as we think about the legislative agenda after the November elections. Of course, the path forward still remains uncertain given substantial policy differences and a limited legislative calendar after the elections.
But why might this matter for markets?
Well, first, it's worth considering the scale of the energy challenge. My colleague Stephen Byrd and his team recently updated their projections for the U.S. data center power shortfall. They now see a potential 57-gigawatt gap through 2028, and that's before accounting for new solutions that could accelerate access to power. That's up from their previous estimate of 38-gigawatts.
And that's why the permitt…
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Will High Yields Crack the Market’s Resilience?
9 oktober 2026 · 4 min
Markets have remained resilient despite the prospect of higher-for-longer rates. Our Global Head of Fixed Income Research Andrew Sheets considers the risks building beneath the surface. Lees meer
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----- Transcript -----
Andrew Sheets: Welcome to Thoughts on the Market. I'm Andrew Sheets, Global Head of Fixed Income Research at Morgan Stanley.
Today, exploring further the question that seems to be on everyone's mind: At what point do higher rates become a problem for markets?
It's Friday, October 9th, at 2pm in London.
We recently hosted Morgan Stanley's ninth annual European Credit Conference here in London. Fifty companies, over a thousand investors, and to some extent, one dominating question.
The market has been impressively resilient this year – but as yields rise, at what point does this change?
I think a good place to start with this question is whether the current level of interest rates are obviously wrong. And I don't think it's clear that they are. Growth in the U.S., Europe, and Asia remains surprisingly robust and has for a lot of this year. Meanwhile, inflation across regions is still generally above central bank targets.
Too high, and a sign that conditions are more likely too hot than too cold. That's the opposite of what the wrong level of rates would imply – as rates that were too high would be curtailing activity and pushing inflation down below target.
Thanks in part to the scale of AI spending and how insensitive the spending has been to the level of interest rates; we're just not seeing this.
I think the yield curve is also confirming this message that the level of rates for now is okay. In an environment where the market thinks that central banks have raised rates too much, it will often so-call invert the yield curve. Pushing short-term interest rates above longer-term ones on the belief that rates that are too high today will need to be lowered when conditions weaken in the future.
We're not seeing th…
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High Mortgage Rates and a Stuck Housing Market
8 oktober 2026 · 9 min
U.S. mortgage rates are hovering around their highest levels in three years. Morgan Stanley Co-Heads of Securitized Products Research Jay Bacow and James Egan examine the forces keeping homeowners locked in and buyers priced out of the housing market. Lees meer
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----- Transcript -----
Jay Bacow: Jim, [we’re] getting a lot of questions about mortgage rates. We've been flying across the country talking to people. Are your arms tired?
James Egan: I'm hoping that all the extra flapping will give them just a little bit more definition so we can show them off as we talk about adjustable-rate mortgages.
Jay Bacow: And that is the definition of an ARM. Welcome to Thoughts on the Market. I'm Jay Bacow, co-head of Securitized Products Research at Morgan Stanley.
James Egan: And I'm Jim Egan, the other co-head of Securitized Products Research at Morgan Stanley
Jay Bacow: Today, we're here to talk about mortgage rates: how quickly they've moved, why they're here, where they might go, and what it means for the mortgage and housing market.
It's Thursday, October 8th, at 9am in New York.
Jim, as of this recording, the 10-year is over 5.3 percent. Rates haven't closed this high since 2002. The 30-year mortgage rate is around 7.5 percent. It’s about 150 basis points up since the beginning of February.
James Egan: Right. There have been quick moves in rates that has led to quick moves in mortgage rates. There are a lot of implications to that – from affordability, the housing market, mortgage market.
But when we think about the relationship between mortgage rates and interest rates, Jay, there's also a feedback mechanism there. Convexity hedging is what it's typically called.
Can you discuss the role that that might have played in this current episode? And what we should expect going forward?
Jay Bacow: Sure. So, the biggest driver of mortgage rates is Treasury rates. And Treasury rates are driven by a number of factors, and right now most p…
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Will Midterms Test the AI Investment Cycle?
7 oktober 2026 · 5 min
The AI investment boom has been a defining force in markets. Our Head of Public Policy Research Ariana Salvatore looks at whether the U.S. midterm elections could change the spending and policies behind it. Lees meer
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----- Transcript -----
Ariana Salvatore: Welcome to Thoughts on the Market. I'm Ariana Salvatore, Head of Public Policy Research at Morgan Stanley.
Today, what the midterms could mean for the AI investment cycle.
It's Wednesday, October 7th at 10am in New York.
I've spoken on this podcast before about the broader implications of the midterm elections.
This time, I want to go a little deeper on what they could mean specifically for AI sentiment.
We think about that through two separate channels. The first is data center opposition, where we do think the elections can be an important catalyst. The second is broader AI safety and regulation, where we think the election outcome matters much less.
And that distinction is important. It suggests that the midterms are more likely to influence investor confidence in the pace and the durability of AI infrastructure spending, rather than fundamentally rewriting the rules governing AI.
Let's start with data centers. Our base case is still a conditional build-out. We still expect substantial AI infrastructure investment, but increasingly subject to conditions around things like power costs, grid investment, siting, permitting, water use, and community impact. We don't expect a broad federal pause on data center development.
AI compute is increasingly being viewed in Washington as strategic infrastructure, particularly when you consider competition with China. So, we think that national security framing should remain supportive of the build-out.
But here's the important point for these elections. Many of the policy levers that can actually delay a project sit well below the federal level. Think about things like interconnection approvals, large load electricity tariffs, zoni…
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Japan’s Banks Enter a New Era of Opportunity
6 oktober 2026 · 4 min
Our Japan Financials Analyst Mia Nagasaka explains why a once-in-30-year investment cycle could transform corporate financing and open a new chapter for Japanese banks. Lees meer
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----- Transcript -----
Welcome to Thoughts on the Market. I’m Mia Nagasaka, Head of Japan Financials Research at Morgan Stanley MUFG Securities.
Today – a once-in-30-year investment cycle is changing how investors think about Japanese banks.
It’s Tuesday, October 6th, at 10am in Tokyo.
For decades, Japanese companies had more cash than investment opportunities. But now it's changing.
This marks a new chapter for Japanese banks. The first stage of recovery was largely about interest rates. As Japan moved away from negative rates, higher lending yields helped bank margins and earnings.
This next stage is about growth in the banking business itself, driven by companies investing more and needing more external capital.
In fact, we think Japan is entering its first meaningful capex cycle in nearly three decades. Investment needs are broadening, from labor-saving technology to the replacement of aging equipment. Companies are also becoming more active in reallocating capital toward businesses where they see stronger returns.
For banks, the most direct opportunity is lending. We expect Japan’s domestic loan market to grow from about 588 trillion yen, or roughly 3.7 trillion U.S. dollars, in the fiscal year ending March 2026 to roughly 712 trillion yen, or about 4.5 trillion dollars, by March 2031. Loan growth could run at around 5 percent annually early in the investment cycle, then settle at about 3 to 4 percent.
And the financing opportunity extends beyond loans. Take Japan’s debt capital markets, where companies raise money by issuing bonds. We expect them to grow from about 52 trillion yen, or roughly 331billion dollars, to 63 trillion yen, or about 401 billion dollars, by March 2031. We also forecast the M&A market to rise from 23 trillion yen, or rou…
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Canada’s Next Growth Phase
5 oktober 2026 · 5 min
Recent headlines about Canada have focused on trade uncertainty and weak productivity. But our Global Economist Arunima Sinha explains why the country may be on the cusp of a stronger, investment-led growth cycle. Lees meer
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----- Transcript -----
Arunima Sinha: Welcome to Thoughts on the Market. I'm Arunima Sinha from Morgan Stanley's Global and U.S. Economics teams.
Today, why Canada's economy may be closer to a new growth phase.
It's Monday, October 5th at 10am in New York.
Canada has been in the news recently. There have been lots of headlines related to trade, around population growth, around weak productivity, years of underinvestment. And those are real constraints, and they have weighed on the near-term outlook.
At Morgan Stanley, we are more constructive on the medium-term outlook for Canada. And we recently wrote a report around this along with our strategists titled, “Canada: The Next Acceleration.” And, from our perspective, we think that the near-term uncertainty around trade is actually clouding the opportunity for global investors.
There are three points that we make in the report.
We estimate that the growth model in Canada over the next three to four years can actually pivot from the export-led growth story that we've seen over the past few years into one that emphasizes capital deepening and greater technological diffusion across the economy.
So, it really is about the domestic build-out and the opportunity in shifting away from trade and export-led growth into a more productive economy – that's not just larger over time but can actually grow at a much faster pace as well. And so, by our estimates, we think that potential growth in Canada could feasibly rise from about 1.5 percent to closer to 1.75 percent.
The way that we see it, this really doesn't require things to start from scratch. There are already large capital pipelines that are in place. But one of the things that we do note is that a lot of these …
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The Tension Between Equities and Bonds
2 oktober 2026 · 5 min
Our Global Head of Fixed Income Research Andrew Sheets examines what rising rates could mean for equity valuations, earnings and investor appetite. Lees meer
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----- Transcript -----
Andrew Sheets: Welcome to Thoughts on the Market. I'm Andrew Sheets, Global Head of Fixed Income Research at Morgan Stanley.
Today, thinking about equity resilience in the face of rising bond yields.
It's Friday, October 2nd at 2pm in London.
The benchmark U.S. 10-year Treasury yield has risen about 100 basis points this year. Global equities, at the same time, are up about 13 percent. And those two facts sit in an uncomfortable tension.
After all, higher bond yields give investors better return options elsewhere, and they also make future corporate profits worth less today, which in theory should push stock prices lower.
But there's a wrinkle here.
That valuation theory actually has two moving parts. What we're referring to here is what we would call a dividend discount model or a Gordon Growth Model, where the value of a company today is worth the value of its dividends divided by the difference of its required rate of return and its growth rate.
The higher the required rate of return, which interest rates push up, hurts a stock valuation. It increases the denominator. But a higher growth rate, well, that works in the opposite direction. That decreases the denominator. It makes the company worth more.
Hopefully, this is intuitive. if a company has to meet a higher return hurdle, it will be worth less today. If a company's growing faster, all else equal, it's worth more. And that, we think, goes a long way to actually explain what's going on in markets today. Because corporate profits are growing quickly.
Over the last year, profits for the S&P 500 are up about 30 percent, and the earnings growth for the median company, well, that's still up in the mid-teens. Growth in Europe, Asia, and emerging markets have also been historically strong.
Indee…
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How AI and Tokenization Could Reshape Wealth Management
1 oktober 2026 · 12 min
Betsy Graseck and Michael Cyprys explore how AI could expand advisor capacity and tokenized assets could grow into a $2.3 trillion market by 2030. Lees meer
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Betsy Graseck: Welcome to Thoughts on the Market. I'm Betsy Graseck, Morgan Stanley's Global Head of Banks and Diversified Finance Research.
Michael Cyprys: And I'm Mike Cyprys, Head of U.S. Brokers, Asset Managers, and Exchanges Research at Morgan Stanley.
Betsy Graseck: Today, we're looking at the next phase of growth across asset and wealth management – and how tokenization, AI, and changing investor flows could reshape the industry.
It's Thursday, October 1st at 9am in New York City.
Assets under management, or AUM, are near record highs across the globe, with a lot changing beneath the surface. Now, much of the recent AUM growth has come from markets rather than from net new client flows. And meanwhile, fees do remain under pressure.
At the same time, technologies like AI and tokenization are creating new opportunities for both asset and wealth managers. Our base case has tokenized real world assets growing from roughly [$]40 billion today to about [$]2.3 trillion by 2030.
Mike, let's start with tokenization. What are the use cases that matter most near term?
Michael Cyprys: So, as we think about it, there's a number of use cases that we see. The most compelling ones really are around cash treasuries and collateral. Take for example, earning yield. Some tokenized funds allow you to earn interest by the minute or the second that is invested rather than having to remain invested by that 4pm cutoff that is the case today.
Another benefit is allowing collateral to move around a lot more easily, and this can help support a shift toward 24/7 markets. So, if securities can trade 24/7 – or derivatives – you may also need the cash leg of that transaction to keep pace. Right now, there are certain futures contracts that do trade over a weekend, but thos…
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4 Market Signals Ahead of the Midterms
30 september 2026 · 5 min
As investors look toward the U.S. midterm elections, the biggest question is what could change. Our Head of U.S. Public Policy Research Ariana Salvatore outlines the signals worth watching. Lees meer
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Ariana Salvatore: Welcome to Thoughts on the Market. I'm Ariana Salvatore, Head of U.S. Public Policy Research at Morgan Stanley.
Today, I'll be talking about the upcoming 2026 midterm elections.
It's Wednesday, September 30th, at 10am in New York.
As the elections inch closer, investors are increasingly asking about potential ramifications. We just put out a deep dive covering our expectations, and we arrive at four key takeaways.
The first, midterms are unlikely to change the core executive-led policy agenda. As we've been noting for some time, a lot of the policy uncertainty that markets have dealt with since the beginning of 2025 has actually come from the executive branch rather than Congress.
Tariffs, trade policy, deregulation, immigration, and export controls are all variables that are going to remain within the White House's authority. So even if control of Congress changes, we don't think investors should assume that those parts of the policy agenda simply go away. Where Congress actually matters more is on fiscal policy. But even there, the range of outcomes is relatively narrow.
The main differences revolve around the timing of scheduled SNAP and Medicaid cuts, defense spending, and how future government funding and debt limit negotiations evolve.
So, that's our first takeaway. Midterms can change the mechanics of governing, but probably not the broader direction of the executive agenda. That means policy uncertainty, at least across those vectors I mentioned, is likely to stay high.
Takeaway number two, we'd be careful about treating the midterms as a direct signal for the 2028 presidential election. Historically, what we see is the issues that dominate a midterm don't necessarily translate to…
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China’s $12 Trillion Manufacturing Upgrade
29 september 2026 · 5 min
Our China Industrials Analyst Sheng Zhong explains how AI, robotics and a major investment cycle could transform China’s manufacturing base and its role in global supply chains. Lees meer
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Sheng Zhong: Welcome to Thoughts on the Market. I’m Sheng Zhong, Morgan Stanley’s China Industrials analyst.
Today – how AI and automation are transforming China’s factories, and what that could mean for global manufacturing.
It’s Tuesday, September 29th, at 3 PM in Hong Kong.
For decades, Made in China has been shorthand for scale, speed, and low-cost manufacturing. Now the story is shifting toward something more ambitious: using technology, productivity, and industrial know-how to shape not just what gets made, but how it gets made.
We call this transition Industry 5.0. Industry 4.0 was about connecting machines and digitizing production. Industry 5.0 goes a step further, using AI to improve how factories schedule production, manage quality, and maintain equipment.
China is starting from a position of enormous scale. It represents roughly 28 percent of global manufacturing value-added and covers all 666 industrial subcategories defined by the United Nations. There are already more than 30,000 basic-level smart factories and more than 100 million connected industrial devices.
That industrial base also gives China a strong platform for robotics. Traditional industrial robots generally perform fixed tasks. Embodied AI could make machines more flexible, allowing them to gain new capabilities through software and updated models. That could effectively turn some physical labor into software-upgradable capital.
And the numbers give you a sense of how quickly this could scale. China could go from selling about 8 million robots a year in 2025 to 29 million in 2030, and 76 million by 2035. That’s roughly a ninefold increase in annual sales in just a decade.
Scaling robotics and AI across such a large manufacturing base will r…
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The Stock Market’s Bad Breadth
28 september 2026 · 5 min
Fewer companies have been driving equity market gains in 2026. Our CIO and Chief U.S. Equity Strategist Mike Wilson looks at what investors should make of the narrowing rally as the year enters its final stretch. Lees meer
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Mike Wilson: Welcome to Thoughts on the Market. I'm Mike Wilson, Morgan Stanley’s CIO and Chief U.S. Equity Strategist.
Today on the podcast I’ll be discussing the Market’s Bad Breadth.
It's Monday, September 28th at 11:30 am in New York.
So, let’s get after it.
The market is up this year. That's the good news. But over the last six weeks, I've been watching something that’s giving me pause. This rally has been carried by a shrinking group of stocks.
More than half of the Russell 3000 is at least 20 percent below its June highs and the S&P 500 forward multiple has fallen to 19 times, close to a new low for the year. Meanwhile, earnings growth is still running in the mid-teens for the median stock and revisions breadth is approaching cycle highs for the S&P 500.
That is not complacency. It is a market that has already done a lot of work to price higher energy costs, a tighter Fed, AI disruption, questions around returns on capital, and geopolitical risk.
Last week on the podcast, I noted that this is classic mid-cycle behavior. Earnings are absorbing lower valuations, and quality is taking the baton from the early-cycle winners. Groups that have led powerfully from the rolling-recession trough have been among the weakest areas recently: Autos, Semis, and short-cycle Industrials.
That is what tends to happen when the cycle matures and the Fed turns less friendly. The market stops paying for high beta. And starts rewarding free cash flow, stable margins, operating efficiency, and earnings that are still being revised higher. That is why I continue to favor large-cap quality, particularly asset-light, services-oriented, and fee-based businesses.
Having said that, there is still one prob…
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AI Meets the Physical Economy
25 september 2026 · 11 min
Morgan Stanley Research analysts Michelle Weaver, Ravi Shanker and Dave Arcaro discuss two industrial inflection points: how long it will be before autonomous trucking becomes a reality and why power infrastructure is racing to keep up with AI-driven demand. Lees meer
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Michelle Weaver: Welcome to Thoughts on the Market. I'm Michelle Weaver, Morgan Stanley's U.S. Thematic and Equity Strategist.
Ravi Shanker: I'm Ravi Shanker, Morgan Stanley's U.S. trade transportation analyst
Dave Arcaro: And I'm Dave Arcaro, Morgan Stanley's Utilities, Power & Clean Energy analyst.
Michelle Weaver: Today, what we learned at Morgan Stanley's Industrials Conference about the changing economics of autonomous trucking and the increasingly tight power market supporting the AI build-out.
It's Friday, September 25th at 10am in New York.
Now, I know we're all on the road taking meetings post-conference, so the audio might sound a little bit different, but we wanted to bring you the latest from our annual Industrials Conference that recently concluded in Laguna Beach, where two themes really stuck out. The growing physical infrastructure demands behind AI, particularly power, and the shift in autonomous trucking from proving the viability of the technology to commercializing it at scale.
Ravi, after roughly a decade of development, you've said autonomous trucking is entering a critical 12 to 18-month period ahead of serial commercial production.
What's changed, and why is the debate shifting from whether the technology works to whether it can be commercialized at scale?
Ravi Shanker: I think for 10 years the industry has been focused on making the technology work. but with players like Aurora now putting up almost half a million miles of fully driverless revenue-generating operations, on public highways in the U.S., day and night, rain and shine, for different customers. With people like Kodiak, also running, several trucks, in …
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The Global Diesel Problem
24 september 2026 · 14 min
Diesel is at the center of an international supply squeeze, with prices rising to historic highs. Andrew Sheets and Martijn Rats unpack why this industrial fuel matters far beyond the pump. Lees meer
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Andrew Sheets: Welcome to Thoughts on the Market. I'm Andrew Sheets, Global Head of Fixed Income Research at Morgan Stanley.
Martijn Rats: And I'm Martijn Rats, Head of Commodity Research at Morgan Stanley.
Andrew Sheets: Today, the secret life of diesel and why there's so much attention on it.
It's Thursday, September 24th at 2pm in London.
Diesel is a fuel that I think a lot of investors may be aware of but not familiar with, so to speak. It's often the other price that you see when you're driving down the road.
But Martijn, it's incredibly important for the industrial side of the economy and unusually disrupted by current geopolitical events. And so, I'd like to really start at the top, or technically the middle of the barrel, so to speak.
What is diesel and what makes it so special?
Martijn Rats: Yeah. When people talk about diesel at the moment, they really talk about sort of three things combined. They talk about outright diesel, as well as jet fuel and also heating oil.
These are effectively part of the same pool of molecules coming out of the refinery. And so, when you look at that sort of pool of molecules, you talk about the things that fuel trucks, trains, ships, tractors in agriculture, excavators, generators, home heating. It is a molecule that has a tremendously broad range of applications.
It's really the fuel of the industrial economy.
One of the characteristics of diesel is that it has very high energy density. In contrast to, say, gasoline, electrifying the uses of diesel is harder because it carries so much punch.
Andrew Sheets: And why has there been so much on diesel recently, given the current energy disruption in these geopolitical events?
Martijn Rats: Yeah. So, the global refin…
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The Unexpected Investment Case for AI Safety
23 september 2026 · 10 min
Tighter AI safety requirements could reshape the pace of AI investment. Ariana Salvatore and Michael Zezas dig into why the spending may shift toward more compute, not less. Lees meer
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Ariana Salvatore: Welcome to Thoughts on the Market. I'm Ariana Salvatore, Head of U.S. Public Policy Research at Morgan Stanley.
Michael Zezas: And I'm Michael Zezas, Deputy Global Head of Research at Morgan Stanley.
Ariana Salvatore: Today, we'll be talking about AI safety and regulation.
It's Wednesday, September 23rd, at 10am in New York.
We put out a note last week on AI frontier capability gain and the associated safety risks.
Those have been in focus in recent weeks, and as a result, we've gotten a number of questions about the path forward for government regulation.
So today, Mike and I are going to get into some of the newest developments, where we think things are headed, and how the midterms could shape that path.
Michael Zezas: Yeah, and this is pretty important because the concern is that if AI safety scrutiny increases, it's going to slow everything down. You might have less CapEx, fewer model releases, and there's all sorts of downstream effects for the pace of U.S. growth and investment strategy in equities and throughout the AI investment theme.
But Ariana, you and the team landed in a bit of a different place and are arguing that a bigger focus on AI safety could end up being a tailwind to compute spend rather than a brake on it. Can you break that down for us?
Ariana Salvatore: Sure. So, the way we see this playing out, is there are five potential states of the world. Some include industry self-policing; some include the prospects for heavier government intervention. Across all of them, as you mentioned, we actually think this is a pretty big tailwind to compute spend and CapEx more broadly.
That's because as the labs integrate greater safety monitoring infrastructure, we think that spend is only goin…
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Why Central Banks Are Raising Rates Again
22 september 2026 · 5 min
Central banks are turning more hawkish as inflation risks increase. Our Global Chief Economist and Head of Macro Research Seth Carpenter explains what that means for the Fed, ECB and Bank of Japan. Lees meer
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Seth Carpenter: Welcome to Thoughts on the Market. I’m Seth Carpenter, Morgan Stanley’s Global Chief Economist and Head of Macro Research. Today, I’m going to talk about all the movement we’ve seen in central banks and how it’s changing our forecasts.
It’s Tuesday, September 22, at 10 a.m. in New York.
Over the past two weeks, our economists here at Morgan Stanley have revised their outlooks for the Fed, the ECB, and the Bank of Japan to include more rate hikes.
Each economy faces different challenges, but all three central banks have arrived at roughly the same conclusion: growth has remained remarkably resilient despite all of the shocks hitting the global economy. And renewed energy-price pressures have increased the risk that inflation proves more persistent than they had previously expected.
The clearest example—and our biggest revision here—is the Fed.
Now for much of this year, we had actually thought the Fed might avoid hiking interest rates altogether. But in addition to this increase that we just saw at the September FOMC meeting, we now expect two additional rate hikes—in December and in March that will bring the terminal rate up to 4.25 to 4.5 percent.
While Chair Warsh has highlighted the inflationary implications of higher energy and commodity prices, for me, the more important signal was the assessment that policy is not sufficiently restrictive.
So in our view, the Fed appears to be reassessing not just the inflation outlook, but the amount of restraint that is required to bring inflation sustainably back to target.
But even with all of that said, we’re still looking at this shift as more of a recalibration of policy for the Fed rather than a fundamental shift in policy. And so the …
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Market Resilience Isn’t Complacency
21 september 2026 · 5 min
Our CIO and Chief U.S. Equity Strategist Mike Wilson discusses why quality stocks, strong earnings and price momentum support his view that the bull market remains intact. Lees meer
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Welcome to Thoughts on the Market. I'm Mike Wilson, Morgan Stanley’s CIO and Chief U.S. Equity Strategist.
Today on the podcast I’ll be discussing the ongoing mid-cycle transition.
It's Monday, September 21st at 11:30 am in New York.
So, let’s get after it.
The S&P 500 is near record highs. That’s despite rising energy prices, two wars running in parallel and AI safety concerns back in the headlines. Meanwhile central banks are tightening. On paper, that's a lot of reasons to be nervous. So are investors just being complacent? I don't think so.
More than 40 percent of the Russell 3000 has fallen at least 20 percent since June, while the S&P 500’s forward price earnings multiple has fallen back to 19 times, which is almost 20 percent lower than a year ago. At the same time, median stock earnings growth is running around 15 percent, and revisions breadth is back near cycle highs. Falling valuations alongside strong earnings growth is not complacency. It is the definition of a classic mid-cycle transition.
That distinction matters because mid-cycle markets tend to frustrate almost everyone. The index can remain resilient while much of the market corrects. Earnings can stay strong while multiples fall. And leadership can change without the bull market ending.
Last week’s Fed meeting fits squarely into that framework. The 25-basis-point hike was largely priced, so the real information was Chair Warsh’s willingness to follow through on his commitment to fight inflation. Recent core inflation data were firmer than expected, but the details were not uniformly hot.
Some of the upside was concentrated in a handful of categories, shelter remained soft, and tariff pass-through appears to be fading. That gave the Fed room to act without…
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Trump-Xi Talks Put Trade and Tech in Focus
18 september 2026 · 5 min
As President Xi heads to Washington, trade, rare earths and AI are set to dominate the agenda. Our Head of U.S. Public Policy Research Ariana Salvatore unpacks what the meeting could mean for supply chains, tech stocks and the broader market. Lees meer
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----- Transcript -----
Ariana Salvatore: Welcome to Thoughts on the Market. I'm Ariana Salvatore, Head of U.S. Public Policy Research at Morgan Stanley.
Today, I'll be talking about next week's U.S.-China summit, specifically the bilateral trade relationship, what we can expect on critical minerals and rare earths, AI dialogues, and what it all means for markets.
It's Friday, September 18th at 10am in New York.
President Xi is scheduled to visit the White House on September 24th for his second meeting with President Trump this year, and his first White House visit in roughly a decade.
The meeting follows President Trump's visit to Beijing in May, where the two sides established a framework for what they call a more constructive relationship of strategic stability. That meeting also produced new trade and investment dialogues, commitments around agricultural purchases and aircraft, and an agreement to begin a dialogue on artificial intelligence.
But next week's summit comes at an important moment because several of the temporary arrangements that helped stabilize the economic relationship are due to expire later this fall.
We think there are three areas to focus on.
The first is trade. The current U.S.-China tariff truce is scheduled to expire in November. Now, public reporting suggests that the two governments are discussing an extension alongside potential announcements on agriculture, non-tariff barriers, and a relatively narrow set of goods that could see lower tariffs.
The question for markets, therefore, is less whether next week produces a comprehensive new trade agreement and more so on whether the two sides can extend the current period of stability and prevent another…
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Why the Fed May Have Further to Go
17 september 2026 · 4 min
After raising interest rates for the first time in more than three years, the Fed still doesn’t see policy as restrictive. Our Global Head of Fixed Income Research Andrew Sheets breaks down what that could mean for the monetary policy path. Lees meer
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Andrew Sheets: Welcome to Thoughts on the Market. I'm Andrew Sheets, Global Head of Fixed Income Research at Morgan Stanley.
Today, why the Federal Reserve may have raised interest rates and yet still thinks that monetary policy is providing support.
It's Thursday, September 17th at 2pm in London.
Yesterday, the Federal Reserve raised interest rates by a quarter of a percent. That part was widely expected. What was more notable was how Chair Warsh described it.
At the press conference following the action, he said that the Fed had removed "a dose of accommodation," and he said that both he and many of his colleagues were hard-pressed to describe broader financial conditions as restrictive.
That's an important distinction that now moves to the heart of the market debate.
If monetary policy is already restrictive, another rate hike means that the Fed is pressing harder on the proverbial brakes on the economy. But if policy is still accommodative, a hike is more like easing off the gas. It means the Fed is simply providing a little less support. And if that is how the committee sees the world, it suggests that there could be further to go.
Following yesterday's meeting, Morgan Stanley's economists now expect two additional quarter point rate hikes in December and March, taking the Fed's target rate range from 4.25 to 4.5 percent; and we then expect those rates to remain there through the rest of 2027.
Three things are driving this updated view.
First is exactly that language around accommodation. The interest rates that keep the economy in balance are always a mystery when viewed in real time. But given booming earnings growth, loan growth, and corporate act…
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One Fed Hike—Or More to Come?
16 september 2026 · 12 min
Our Global Head of Macro Strategy Matthew Hornbach joins our Chief U.S. Economist Michael Gapen to discuss the Fed’s potential next moves and how energy prices are influencing market expectations. Lees meer
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Matthew Hornbach: Welcome to Thoughts on the Market. I'm Matthew Hornbach, Global Head of Macro Strategy at Morgan Stanley.
Michael Gapen: And I'm Michael Gapen, Morgan Stanley's Chief U.S. Economist.
Matthew Hornbach: Today, what the Federal Reserve decided at its September meeting and what it could mean for rates through the end of the year.
It's Wednesday, September 16th at 4pm in New York.
So, Mike, the Fed raised rates by 25 basis points at this week's meeting. What stood out to you the most in the decision? And when it comes to inflation, how do you think this 25-basis point rate hike is actually going to affect the inflation outlook?
Michael Gapen: Yeah, so certainly the decision was in line with expectations. You know, obviously what we've learned in the very broad sense is that inflation isn't moving fast enough in the direction that the Fed wants. So, it's responding by tighter monetary policy. And that does set up a very interesting question which you just asked, which is: Well, is it going to work? Is this the right response to the inflation that we're seeing?
So, if you do go back and reread that Jackson Hole speech, there's not a lot in there about the drivers of inflation, what's causing higher inflation. But it's clear the only response to above target inflation from the point of view of the chair was tighter monetary policy. So, the Fed is in a bit of a pickle.
Most of us believe the majority of the inflation we're seeing is supply side driven from tariffs, from energy. At least in the past, let's call it supply chain disruptions, a de-globalization narrative. Some of it is demand side driven through AI. But I think we're all looking at that thinking modestly tighter rates isn't nece…
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The Mid-Cycle Shift Equity Investors Shouldn’t Miss
15 september 2026 · 5 min
Our CIO and Chief U.S. Equity Strategist Mike Wilson breaks down how the market is transitioning to a mid-cycle environment, with leadership shifting toward higher-quality, asset-light companies with durable earnings. Lees meer
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Mike Wilson: Welcome to Thoughts on the Market. I'm Mike Wilson, Morgan Stanley’s CIO and Chief U.S. Equity Strategist.
Today on the podcast I’ll be discussing why inflation should not be a concern for equity investors.
It's Tuesday, September 15th at 9 am in New York. So, let’s get after it.
The markets have spent the past few months doing far more work than what most casual observers might think. Since early June, the S&P 500 has chopped sideways, but underneath the surface leadership has changed materially. The early-cycle, capital-intensive winners are giving way to higher-quality companies with stronger free cash flow, better margins with more asset-light businesses. Software, Financial Services, Insurance, and Healthcare Services are beginning to show the earnings revision strength that Semiconductors and other cyclicals enjoyed earlier this year. To me, that is the market confirming an economy moving from early to mid-cycle.
While many investors are debating yesterday’s news, the market is already moving to new leadership. A good example of this is the inflation data that was released last week. The results were a bit higher than expected and elicited quite a reaction from the media and Fed watchers. However, the probability of a September interest rate hike has been rising for months and was close to 70% before the data were released. Now it’s 95%. Equities have de-rated alongside that repricing in the bond market. In short, the inflation data may have been news to some, but it wasn’t to Mr. Market.
While some may view this as the Fed being behind the curve, the bond market has been expecting it for months and essentially doing the tightening for the Fed. Equity markets are…
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Patients Are Taking the Driver's Seat in Healthcare
14 september 2026 · 9 min
Healthcare companies are rethinking their business models as patients gain more control over how they access care and purchase medicine. Our analysts Erin Wright and Terence Flynn unpack this shift and the emerging opportunities. Lees meer
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Erin Wright: Welcome to Thoughts on the Market. I'm Erin Wright, US Healthcare Services Analyst at Morgan Stanley.
Terence Flynn: And I'm Terence Flynn, Morgan Stanley's US BioPharma Analyst.
Erin Wright: Today, how the consumer is moving into the driver's seat across healthcare.
It's Monday, September 14th at 7:00 AM
We're recording in New York City, where Morgan Stanley's twenty-fourth Annual Healthcare Conference is happening this week. One of the biggest shifts we're seeing across the industry is patients gaining more choice, transparency, and control over how they access care and medicine. You can already see it in everyday behavior. In our AlphaWise survey earlier this year, thirty-four percent of US consumers said that they'd chosen to take a voluntary wellness lab test in the past three years, and roughly two-thirds already own a wearable or plan to buy one.
And now we're seeing the same trend reshaping how people buy medicine and choose care. So Terence, let's start with biopharma. For years, direct-to-consumer pharma meant advertising and nudging people to ask your doctor about what particular treatment is best for them. What's different this time around? And what's different in this next wave of direct access?
Terence Flynn: Yeah, absolutely. Thanks, Erin. So for most of the industry's history, the patient sat at the end of the value chain and had really limited control over the product, the price, or the route through which the drug was obtained.
Manufacturers marketed to doctors and consumers, but the transaction was itself intermediated. So we think that's starting to change here. It's no longer simply about more consumer advertising or another cash pay …
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Why the Middle-Class Squeeze Is Getting Worse
11 september 2026 · 11 min
Heather Berger of the U.S. Economics Team hosts Wealth Management Senior Economist and Strategist Sarah Wolfe to discuss what it takes to define the middle class in America today. They break down how factors like rising essential costs and the development of AI are reshaping consumer balance sheets and financial security. Lees meer
Sarah Wolfe is a member of Morgan Stanley's Wealth Management Division and is not a member of Morgan Stanley’s Research Department. Unless otherwise indicated, her views are her own and may differ from the views of the Morgan Stanley Research Department and from the views of others within Morgan Stanley.
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Heather Berger: Welcome to Thoughts on the Market. I'm Heather Berger from Morgan Stanley's U.S. Economics Team.
Sarah Wolfe: And I'm Sarah Wolfe, Senior Economist and Strategist on Morgan Stanley's Thematic and Macro Investing team in the Global Investment Office.
Heather Berger: Today, the K-shaped economy, the middle class, and how AI could reshape both.
It's Friday, September 11th, at 10a.m. in New York.
The K-shaped economy has been a major theme this year. At its core, it describes an economy where households are experiencing very different circumstances. Those with more assets have benefited from rising wealth, while those with less wealth remain more dependent on income and more exposed to increases in essential costs. But that top versus bottom framing can miss an important part of the story: the middle class. Sarah, you recently wrote about what it takes to make it to the middle class in America. How would you define the middle class today, and how does that differ from the way that households define it themselves?
Sarah Wolfe: I think the important thing here is that economists and households define the middle class very differently from each other, and, and I'll get into why that's the case.
So if you're an economist, the middle class is roughly defined as two-thi…
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The Fed, Football and the Price of Ambiguity
10 september 2026 · 5 min
Our Global Head of Fixed Income Research Andrew Sheets discusses when markets may not adequately compensate investors for uncertainty around themes like Fed policy, AI financing and energy supply. Lees meer
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Andrew Sheets: Welcome to Thoughts on the Market. I'm Andrew Sheets, Global Head of Fixed Income Research at Morgan Stanley. Today, what American football can teach us about the value of ambiguity.
It's Thursday, September 10th at 2p.m. in London.
I really like this time of year. It's a little cooler outside. There's the excitement in the air of a start of a million new school years. And of course, it's finally American football season. Of the top one hundred US television telecasts in 2025, ninety were football games. In an increasingly divided world with an increasingly fragmented ecosystem for content, this unanimity is stunning. And while many factors explain football's popularity, one that I've come to appreciate more with time is its strategic complexity, especially the value of ambiguity.
Not tipping whether the play is a run or a pass, disguising whether and where you're going to blitz. Coaches work hard to keep their options open until the last possible moment. And as we enter September, this strategy is not just confined to football.
Take the Fed. Markets are pricing a roughly two-thirds chance of a rate hike next week, about the same chance that an NFL team passes on second and seven. Part of that uncertainty comes from exactly how you parse Fed Chair Warsh's comments at Jackson Hole. Chair Warsh said the Fed needs to be confident that underlying inflation is moving towards its objective, “clearly and at sufficient speed.” Otherwise, it has, "work to do." This was generally interpreted as a move closer to raising rates. But was it? What is sufficient speed? What counts as underlying inflation? And what does “work to do” actually mean? After all, if inflation is better in the second half of th…
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Can the AI Spending Boom Pay Off?
9 september 2026 · 5 min
Big Tech is pouring more than $1.4 trillion into AI, prompting investors to ask: Is it worth it? Our U.S. Internet analyst Brian Nowak looks at three business models that could earn 25 to 50 percent returns for Gen-AI-enabled technologies. Lees meer
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Brian Nowak: Welcome to Thoughts on the Market. I'm Brian Nowak, Morgan Stanley's U.S. Internet analyst.
Today, can the enormous investment behind Gen AI actually pay off?
It's Wednesday, September 9th, at 9am in New York.
AI has moved quickly into everyday life. It helps people write software, research purchases, automate work, find information, among myriad[s] of other use cases.
But we need an infrastructure build-out of extraordinary scale to support all of this activity and more activity to come.
In all, we estimate that the major cloud providers are going to spend more than $1.4 trillion on this AI build-out next year alone. But compute capacity is potentially going to quadruple from 2025 to 2028, reaching roughly 120 gigawatts.
But all of the spending has raised a lot of questions for investors. One of the most common questions is: What kind of return on invested capital can these companies earn from all of these trillions of dollars of data center infrastructure investment?
Well, our bottom-up work points to encouraging answers to this question.
We see paths to roughly 25 to 50 percent return on invested capital, or ROIC, across three emerging AI business models. Now, ROIC is a useful way of measuring whether investments pay off. Think of it as how much after-tax operating profit can be generated relative to the capital required in the first place.
The first business model we've analyzed is renting compute power. This is the infrastructure layer of the AI economy. Cloud providers build data centers filled with advanced graphics processing units, or GPUs, and rent that compute capacity to customers. In our base case, a large next-generation data cen…
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AI Debt Starts Moving the U.S. Treasurys Market
8 september 2026 · 9 min
U.S. Treasurys are the foundation of the bond market. But our strategists Matthew Hornbach and Vishy Tirupattur explain the growing impact of corporate credit as AI financing accelerates. Lees meer
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----- Transcript -----
Matthew Hornbach: Welcome to Thoughts on the Market. I'm Matthew Hornbach, Global Head of Macro Strategy at Morgan Stanley.
Vishy Tirupattur: I am Vishy Tirupattur, Chief Fixed Income Strategist.
Matthew Hornbach: Today, the interplay between the U.S. Treasury market and the corporate bond market.
It's Tuesday, September 8th at 10am in New York.
So, Vishy, what I'd like to do is start by asking you what's going on in the corporate bond market? What's coming to market? How much duration does it have? Talk to us about the theme of AI in corporate bonds.
Vishy Tirupattur: So, this is what is happening. Hyperscalers have enormous CapEx needs, and they'll see opportunity for realizing return on invested capital; and in anticipation of that, the CapEx requirements for the AI infrastructure are enormous.
And the key motivation that underlies is that the demand for compute vastly exceeds the supply of compute. And that as long as that demand-supply imbalance is there, there is a continuing need for CapEx, and that CapEx needs to be financed.
And credit markets across the board, not just the unsecured market. You know, credit markets in public space, private, investment grade, unsecured, secured, high yield, below investment grade, leveraged loans, private credit – all of these channels of the credit markets are going to be deployed to enable that financing.
Matthew Hornbach: Now, Vishy, you've written about this extensively over the course of the past year and have really been on the forefront of expecting a lot of supply. But have you even been surprised at the scale of the supply that we've gotten from these hyperscalers?
Vishy Tirupattur: We are surprised, not so much by the scale of the issuance, but certainly …
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What Could Shake Up Markets in September?
4 september 2026 · 4 min
Investors have plenty to digest this month, from economic data to central-bank decisions. Our Global Head of Fixed Income Research Andrew Sheets outlines what could drive the next bout of volatility. Lees meer
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Andrew Sheets: Welcome to Thoughts on the Market. I'm Andrew Sheets, Global Head of Fixed Income Research at Morgan Stanley.
Today, several catalysts for more volatility later this month.
It's Friday, September 4th at 2pm in London.
Over more than a century of market history, Septembers have tended to see more volatility than the average month. You can't exactly set your watch by it, but the trend is definitely there. As investors come back from summer and capital market activity restarts in earnest, things historically tend to move.
This idea seems especially relevant this year. Despite the headlines, it was a pretty calm summer for markets. Since early June, U.S. stocks, yields, and credit were all modestly higher, and they got there with minimal movement. The realized volatility – that is how much these markets are moving on a daily basis – has been historically low.
September offers a number of catalysts that could test that.
First and foremost is the Fed. Inflation remains above the central bank's target, and markets are pricing a roughly two out of three chance of a rate hike at the September 16th meeting. That's more uncertainty this close to a meeting than we've had in a while – and the impact goes far beyond a single decision. Live meetings from the Bank of Japan and the European Central Bank also loom in September.
September is also a month that historically sees unusually heavy capital market activity. That makes sense. If you're a corporate and looking to raise money, it's often better to wait until investors are back from the summer before going out looking for those funds.
But this September could be unusually active, given a growing IPO pipeline and continued funding needs from AI-…
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Why Oil Prices Could Rise to $100 Again
3 september 2026 · 6 min
Our Global Commodities Strategist Martijn Rats explains how tightening supply and shrinking buffers are pushing Brent prices up again, and what that would mean for fuel costs and energy markets. Lees meer
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Martijn Rats: Welcome to Thoughts on the Market. I’m Martijn Rats, Morgan Stanley’s Global Commodities Strategist.
Today: why the oil market is tightening, and why we now see Brent reaching $100 per barrel later this year.
It’s Thursday, September 3rd, at 3pm in London.
It has been an extraordinary summer for oil. Brent — the global benchmark price for crude oil and the reference point for most of the world's oil trade — traded above $110 per barrel in mid-May, fell to $71 by early June, climbed back above $100 three weeks later, and then dropped again to around $79 per barrel. More recently, prices have moved higher again.
But the question now is whether that is just another temporary swing. Or whether there is a sign that the underlying market has changed.
We think it has changed. Supply is tightening, inventories are falling, and some of the buffers that helped absorb earlier disruptions are fading.
The clearest evidence is in inventories. Crude oil sitting on the water fell from nearly 1.3 billion barrels in mid-July to 1.1 billion barrels recently. That was a decline of about 190 million barrels. During one four-week stretch, oil-on-water fell at the unusually high rate of 5.3 million barrels a day, the fastest four-week decline since this data series began about eight years ago.
Usually, when there is such a large amount of crude oil that is brought on land, it drives up onshore oil inventories. However, not on this occasion. On a global basis, onshore crude oil inventories have fallen by another 38 million barrels over the same period. That means that those offshore barrels arriving were being used straight away rather than put into land-based storage.
The biggest supply issue is still the Midd…
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3 Policy Catalysts to Watch This Fall
2 september 2026 · 10 min
Midterm elections, backlash against data centers and a U.S.-China summit. Michael Zezas and Ariana Salvatore discuss themes that could test investor confidence in the coming months. Lees meer
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----- Transcript -----
Michael Zezas: Welcome to Thoughts on the Market. I'm Michael Zezas, Deputy Global Head of Research for Morgan Stanley.
Ariana Salvatore: And I'm Ariana Salvatore, Head of Public Policy Research.
Michael Zezas: Today, we'll look ahead to public policy catalysts that matter for investors this fall.
It's Wednesday, September 2nd at 10:30am in New York.
Okay, Ariana, there's a few days left in the summer, and investors are already starting to think about what's going to happen this fall. And there's a pretty heavy calendar; everything from midterm elections to some pretty important diplomatic dates. High level, what do you think people need to focus on?
Ariana Salvatore: So, I'll start with probably the most consequential catalyst of the list that you mentioned, and that's the midterm elections. Obviously, not until November 3rd, but the debate is going to start to emerge over the coming weeks – in terms of if Democrats were to win just one chamber versus both chambers; if Republicans were to keep control; what could that mean for markets? And what are the durable policy themes?
I think in this context, the biggest debate far and away is on data center pushback. And this has transitioned from more of a macro thematic. So, investors trying to understand the potential implications for the CapEx build-out, to more of a micro really granular question, right? Which races are the ones that we need to watch? Where are there states or jurisdictions that projects that are pending could be possibly called into question?
And that's, sort of, the continuous debate that I've had recently with investors, trying to pinpoint it more precisely to figure out where exactly the build-up could be impacted.
Michael Zezas: So, I hear from …
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The $33 Billion AI Security Opportunity
1 september 2026 · 4 min
As AI agents gain access to sensitive enterprise systems, companies need new ways to control what they can do. Meta Marshall breaks down the emerging market for agentic identity security. Lees meer
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----- Transcript -----
Meta Marshall: Welcome to Thoughts on the Market. I’m Meta Marshall, Morgan Stanley’s U.S. Cybersecurity and Telecom & Network Equipment analyst.
Today: AI assistants are starting to act on our behalf at work, which brings up a critical question. What should these agents be allowed to do? And how should those permissions be granted?
It’s Tuesday, September 1st, at 10am in New York.
More and more, AI is helping us get through the workday. We ask it to summarize documents, analyze data and take notes during meetings. Increasingly, though, these tools are moving beyond just answering questions to acting on our behalf.
Suddenly, the security challenge shifts from managing a tool to governing a whole new digital workforce. In coming years, this problem should get bigger as we estimate seeing 79 AI agents and 109 machine identities for every human employee.
Now, traditional identity security at work was built to answer two basic questions: Who are you, and what can you access? Think of it as your office badge. It identifies you and determines what doors you can open.
AI agents, however, make that question much harder to answer. They can operate autonomously, move across applications and databases, collaborate with other agents. They take actions without direct human involvement.
So, companies need to know not only what an agent can access, but why it needs access, for how long, and what it actually did. That’s the core foundation of agentic identity solutions.
The risk environment from this problem is already substantial. About 80 percent of breaches in the work environment today involve stolen or misused credentials. Nine out of 10 organizations experienced an identity-related breach in the past year, and 83 perc…
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From Coffee to Cans: A U.S. Caffeine Shift
31 augustus 2026 · 5 min
Younger generations are reshaping caffeine consumption. Our U.S. Household Products and Beverage Analyst Dara Mohsenian discusses how the growing appetite for energy drinks could influence beverage habits for years to come. Lees meer
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----- Transcript -----
Dara Mohsenian: Welcome to Thoughts on the Market. I'm Dara Mohsenian, Morgan Stanley's U.S. Household Products and Beverage Analyst.
Today, we're going to talk about how the next generation of U.S. consumers is really redefining their daily caffeine boost.
It's Monday, August 31st at 10am in New York.
For generations of Americans, caffeine has been synonymous with coffee. You wake up, make a pot, or stop at a coffee shop and start your day.
But the picture today is different. Younger consumers have grown up with many more choices to jumpstart their day. Walk into a convenience store, gym, or college library these days, and you'll see that energy drinks are increasingly becoming an alternative for getting their caffeine boost.
The reason people are drinking more of these caffeinated beverages is pretty straightforward. They want more energy. Among consumers who increased their energy drink consumption over the prior three months, 61 percent said they needed more energy.
Experimentation is important, too. 44 percent cited trying new flavors, and 37 percent said they were trying new brands.
Our survey of roughly 3,000 U.S. consumers points to significant runway for energy drinks going forward. When we spoke to current energy drink consumers, a net positive 19 percent expected to increase their consumption over the next three months. That's well above our prior surveys and is true for both men and women.
Perhaps more interesting is who expects to drink more. Demographics have always been a key driver of energy consumption. The younger generation is increasingly choosing energy drinks over, historically, coffee and carbonated soft drinks. In our survey, importantly, if you loo…
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The Politics Behind the Rising U.S. Debt
28 augustus 2026 · 5 min
Our Head of U.S. Public Policy Research Ariana Salvatore looks at what the midterms may reveal about politician’s appetite for tackling the faster-than-expected increase in the U.S. debt. Lees meer
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----- Transcript -----
Ariana Salvatore: Welcome to Thoughts on the Market. I'm Ariana Salvatore, Head of U.S. Public Policy Research at Morgan Stanley.
Today, why fiscal is back in focus and what we can learn about the broader debt trajectory from the upcoming midterm elections.
It's Friday, August 28th at 10am in New York.
Fiscal policy has moved back onto investors' radars following Treasury's recent buyback announcements. Those came in the same week that total U.S. debt crossed $ 40 trillion for the first time, a milestone that arrived months earlier than most people expected.
As my colleague Andrew Sheets puts it, that's a big number. But the more useful question isn't the number itself. It's whether all this debt is starting to act as a brake on the economy.
We don't quite yet see a credibility problem in the Treasury market, but that's exactly why fiscal is back in the conversation. And it sits against a bigger backdrop.
The U.S. continues to run large deficits in an economy that isn't in a recession. Our economists expect the deficit to stay around 6 percent of GDP through 2027. And voters are clearly concerned about elevated debt levels.
So why isn't fiscal austerity coming up more in DC? Simply put, we think the political incentives point the other direction.
At the risk of oversimplifying, fiscal consolidation or deficit reduction means either less spending or more taxes. And the political costs of those choices land immediately. We think neither party, therefore, has the incentive to take on that type of policy change – if we don't see a meaningful cliff or a risk to existing programs, especially into an election.
But what about after? We think the midterms won't in and of themselves be a catalyst to fix the debt traj…
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Jackson Hole Tests the Fed’s Framework
27 augustus 2026 · 12 min
Investors are keeping a close eye on Jackson Hole for signals on the economic outlook and the path for rates. Our Chief U.S. economist Michael Gapen joins Global Head of Macro Strategy Matthew Hornbach to discuss whether markets get what they want—or what the Fed needs. Lees meer
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----- Transcript -----
Matt Hornbach: Welcome to Thoughts on the Market. I'm Matthew Hornbach, Global Head of Macro Strategy at Morgan Stanley.
Michael Gapen: And I'm Michael Gapen, Chief U.S. Economist.
Matt Hornbach: Today, we'll be discussing the Jackson Hole Economic Symposium and Chairman Warsh's opening remarks.
It's Thursday, August 27th at 10am in New York.
So, Mike, let's get right into it and talk about the upcoming opening remarks by Chairman Warsh at the Jackson Hole Economic Symposium that will be delivered to the public at 10 am tomorrow, Friday. How are you thinking about what to expect from those opening remarks?
Michael Gapen: Well, historically, and by historically, I mean in a post-2008-2009 world, Jackson Hole has been used, not every year, but frequently as a venue to communicate to markets. The longest gap on the Fed's meeting calendar is between the July and September meetings. So, Jackson Hole falls between that and provides a useful opportunity to communicate what might be coming.
That's what's normally been done. Warsh has repeatedly stated he wants the Fed to talk less and communicate less and say less. So, I don't think we will see or hear, in this case, a lot about his views about how the economy is operating today and how monetary policy may be conducted into year-end. So, I don't think we'll hear a lot about, say, the December; the outlook for the economy from September to December, and what it might imply for interest rate policy or balance sheet policy.
So, little in the way of near-term forward guidance.
I do think, however, he did say in the July press conference that the venue would be good to tackle some of these…
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When Does Higher U.S. Debt Start to Matter?
26 augustus 2026 · 4 min
Our Global Head of Fixed Income Research Andrew Sheets discusses when and how higher yields and mounting U.S. debt could become more than abstract concerns. Lees meer
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----- Transcript -----
Andrew Sheets: Welcome to Thoughts on the Market. I'm Andrew Sheets, Global Head of Fixed Income Research at Morgan Stanley.
Today, at what point do higher yields and higher debt actually matter?
It's Wednesday, August 26th at 2pm in London.
In its first 240 years, the United States of America accumulated roughly $20 trillion in federal debt. The country has borrowed another [$]20 trillion in just the last 10.
The question for investors is when this debt load will act as a brake on economic activity? Or, worse, create stress that disrupts today's relative calm?
So, let's start with the first question.
For economic activity, the bar seems pretty high. You see, even with all the activity around AI, U.S. corporate debt as a share of the overall economy is broadly unchanged in the last decade and actually lower than where it was before the pandemic.
The balance sheets of the household sector in the U.S. are even stronger. Household debt to GDP is lower than where it was prior to COVID and lower than where it was in the year 2000. And this may even understate the strength – because much of this debt is locked in at historically low mortgage rates; while household assets, the other side of the balance sheet, have soared to record levels.
That may help explain why both consumers and businesses have remained more resilient than expected this year despite the higher interest rates and energy prices.
This divergence of trend between public and private balance sheets is also global. Europe has also seen higher government debt offset by even more private sector de-leveraging, while Japan has seen rising public borrowing and pretty stable private sector leverage.
To some degree, this divergence between the public and private sides of the economy ref…
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Measuring the Market’s Megatrends
25 augustus 2026 · 9 min
Paul Walsh, Michelle Weaver and Daniel Blake discuss how thematic mapping can help investors separate true beneficiaries from market hype and identify risks hiding beneath the surface. Lees meer
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----- Transcript -----
Paul Walsh: Welcome everyone to Thoughts on the Market. I'm Paul Walsh, Morgan Stanley's Head of Research in Europe.
Michelle Weaver: And I'm Michelle Weaver, U.S. Thematic and Equity Strategist.
Daniel Blake: And I'm Daniel Blake, Head of Asia Thematic Strategy.
Walsh: And today we're discussing why thematic investing may be entering a new phase – moving from simply identifying big ideas to systematically measuring them.
It's Tuesday, the 25th of August at 2pm in London.
Weaver: It's 9am in New York.
Blake: And it's 9pm in Singapore.
Walsh: Daniel, let's kick our discussion off today. Thematic investing has become one of the most important ways for investors to think about long-term opportunities. But your latest work suggests the framework itself is evolving. So, what's changing?
Blake: Well, if you look at where we've started. So thematic investing has been narrative-driven, focusing on identifying major structural trends for investors. So, at Morgan Stanley, we've identified core themes of artificial intelligence and tech diffusion, the future of energy, societal shifts, and the transition to a multipolar world.
So, what's changing is that investment approaches are becoming much, much faster. So, we're now seeing clients deploy agentic AI to drive trade recommendations. And sure, AI can read a new 100-page thematic report from Morgan Stanley faster than humans. But for the right conclusions, it's important to connect these models with high-quality data sets. And we think that's going to be helpful for human investors as well.
So, this is where the third phase of thematic investing comes in. The first phase was identifying secular trends that cut across markets and industries. The second phase was creating…
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Markets Faces Hotter, Shorter Cycles
24 augustus 2026 · 5 min
Bonds may no longer provide the shelter investors have expected. Our CIO and Chief U.S. Equity Strategist Mike Wilson talks about the changing relationship between inflation, yields and risk. Lees meer
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----- Transcript -----
Bonds may no longer provide the shelter investors have ex
Mike Wilson: Welcome to Thoughts on the Market. I'm Mike Wilson, Morgan Stanley’s CIO and Chief U.S. Equity Strategist.
Today on the podcast I’ll be discussing the shifting landscape in macro markets.
It's Monday, August 24th at 11:30am in New York.
So, let’s get after it.
Over the past few weeks we’ve seen large moves in rates, oil, gold and crypto. What does it mean for equities?
First, investors are still treating these markets as separate stories, when they are all part of the same regime shift that began with COVID. More than six years ago, in the depths of that recession, I argued investors should prepare for the return of inflation. That was a very out of consensus view.
At that time, the world was obsessed with deflation, the 10-year Treasury yield was below 1 percent, stocks had been hit hard, and gold was sitting around $1,500 an ounce. But the policy response to COVID – what I called helicopter money – changed the game. It marked the end of the 40-year disinflationary regime and a very different investment environment for investors to navigate.
It is also the foundation of our run it hot thesis. In a world where inflation has returned, cycles are likely to be shorter, policy more reactive, and leadership changes more frequent. That is very different from the 1982-to-2020 period.
Then falling inflation and falling rates allowed economic cycles to stretch for eight or 10 years. We are now in a world that looks more like the post-World War II era: stronger nominal GDP growth, more persistent inflation, higher economic volatility, and a bond market that is no longer the tailwind it used to be for risk assets. In short, the great secular bu…
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Shifts in Credit Markets for the AI Buildout
21 augustus 2026 · 5 min
AI’s enormous capital requirements are reshaping the way companies tap credit markets. Our Chief Fixed Income Strategist Vishy Tirupattur takes stock of this summer’s key financing developments. Lees meer
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----- Transcript -----
Vishy Tirupattur: Welcome to Thoughts on the Market. I am Vishy Tirupattur, Morgan Stanley’s Chief Fixed Income Strategist.
Today: Why the summer of 2026 is all about AI Financing and the evolution of credit markets.
It is Friday August 21st at 2pm in New York.
The summer of 2026 may ultimately be remembered not for a new model release or a breakthrough chip, but for developments in AI financing that highlighted how quickly capital markets are adapting to the demands of the AI buildout.
The starting point of our analysis remains unchanged: the demand for compute continues to outstrip supply of compute, resulting in upward revisions in AI infrastructure capex expectations as hyperscalers commit additional capital to secure future capacity.
Our equity research colleagues now estimate that the total capex for the four largest hyperscalers will rise 57 percent in 2027 versus 2026. These spending plans reflect growing conviction that such investments can generate 25 percent plus returns on invested capital.
At the same time, the lag between capex deployment and monetization continues to pressure near-term cash generation, with our analysts' 2027 free cash flow estimates for the four hyperscalers continuing to move lower.
To a credit analyst, what this means is that the result is a widening financing gap in 2027. That means AI-related credit issuance will remain substantial and may even need to increase further before cash flows from these investments begin to catch up.
Developments in credit spreads this summer have been equally telling. Credit spreads for hyperscalers have widened meaningfully. More notable even than the absolute level of widening is the divergence across financing channels.
For example,…
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The New Map of AI Power
20 augustus 2026 · 8 min
AI is becoming a matter of national strategy, as countries seek more control over their own technology. Our Heads of U.S. Public Policy Ariana Salvatore and Global Thematic Research Stephen Byrd look at the race for AI sovereignty and its implications for investors. Lees meer
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----- Transcript -----
Ariana Salvatore: Welcome to Thoughts on the Market. I'm Ariana Salvatore, Head of U.S. Public Policy Research at Morgan Stanley.
Stephen Byrd: And I'm Stephen Byrd, Head of Global Thematic Research at Morgan Stanley.
Ariana Salvatore: Today, we'll be talking about AI sovereignty, what it means, what countries around the world are doing to advance their own goals, and what a more fragmented AI ecosystem could mean for investors.
It's Thursday, August 20th at 2pm in New York.
Stephen Byrd: And it's 9pm in Helsinki.
Ariana Salvatore: As AI becomes more powerful and therefore more important to the global economy, countries are asking a basic question: How much of it do we need to control ourselves? That's at the heart of AI sovereignty, making sure governments around the world can access the computing power, data, energy, and technology they need even as geopolitical tensions may rise.
Stephen Byrd: And that seems to fit into a broader trend we've been talking about for some time, a more multipolar world where governments are increasingly willing to intervene in markets around strategically important technologies.
Ariana Salvatore: Exactly. We describe this as a potential ‘two worlds dynamic.’ The U.S. and China have been gradually de-risking from one another, particularly in advanced technology.
We've already seen policy tools, including export controls, tariffs, and incentives for domestic manufacturing. And as AI becomes more strategically important, our expectation is for policy intervention to increase rather than decrease. But what's interesting is that the U.S. and China aren't necessarily pursuing sovereignty in the same way.…
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El Niño’s Ripple Effects on Markets
19 augustus 2026 · 5 min
From chocolate and sugar prices to energy markets and inflation, El Niño’s impacts may soon reach far beyond the weather forecast. Our Latin America Agribusiness Analyst Julia Rizzo maps out where the pressure could emerge first. Lees meer
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----- Transcript -----
Welcome to Thoughts on the Market. I’m Julia Rizzo, Latin America Agribusiness Analyst at Morgan Stanley.
Today: how El Niño could move from the Pacific into commodity markets, grocery prices, and investor portfolios.
It’s Wednesday, August 19th, at 10am in Sao Paulo.
You may not follow rainfall patterns in Brazil or cocoa-growing conditions in West Africa. But you immediately notice when chocolate, groceries, or electricity cost more. And you can connect the dots to El Niño -- a warming cycle in the Pacific Ocean that disrupts weather globally. It changes where rain falls and shapes the outlook for crops, power markets, transportation, and inflation.
There is now a 95 percent chance of a very strong El Niño in the fourth quarter of 2026. It could end up being among the most powerful events in more than 75 years of recorded history. Timing and location matter greatly. Crop damage often depends on whether heat or heavy rain arrives during a narrow planting, flowering, or harvest window.
The most direct effects are likely to appear first in commodities. Sugar is on the list of commodities most exposed to favorable price dynamics from weather conditions. Cocoa also looks tight. Grains are more complicated. Soybeans need evidence of a net South American production loss. Problems in northern Brazil may be offset by stronger crops in Argentina or Brazil south. Corn is even more dependent on timing. The key near-term catalyst remains U.S. weather and crops.
What happens next matters well beyond agricultural markets. Food is the main channel through which El Niño reaches the broader economy, and the effect usually appears after a one-year lag. That makes inflation primarily a …
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Korean Stocks: From Correction to a Healthy Recovery
19 augustus 2026 · 5 min
After a historic rally and a sharp correction, South Korea’s equity market may be approaching a turning point. Our Chief Korea Equity Strategist, Joon Seok, explains that the next cycle will need stronger foundations and more sectors joining in. Lees meer
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----- Transcript -----
Welcome to Thoughts on the Market. I’m Joon Seok, Morgan Stanley’s Chief Korea Equity Strategist.
Today: Why Korea’s equity market may be moving from a sharp reset toward a broader and more sustainable recovery.
It’s Tuesday, August 18th, at 2pm in Seoul.
South Korea’s stock market has delivered the kind of ride that makes even long-term investors check their phones more often than they would like. The KOSPI surged 101 percent in the first half of 2026, then fell more than 38 percent from its peak by July 30th. But the market now appears to be moving toward a more durable recovery.
The first reason is valuation. Take the KOSPI’s forward price-to-earnings ratio, which compares share prices with expected profits over the next year. It fell below five times, its lowest level since 2004. Our capitulation index also dropped to minus 2.53. This index combines market momentum with the breadth of the sell-off, so it helps show whether fear has become widespread. Readings below minus two have often marked troughing territory outside the major crises.
The second reason is that forced selling appears to be easing. Now, we have seen leverage as a double-edged sword as leverage helped fuel the rally, but it also made the decline sharper as investors were forced to cut positions. Assets in leveraged single-stock ETFs have fallen about 70 percent from their June peak, and margin lending has also come down. Now, hedge funds have completed roughly three quarters of a typical risk-reduction cycle. Put simply, the most intense selling may already be behind us.
Still, a healthier recovery needs more than a rebound by the tech sector. Tech remains central because AI infrast…
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When AI Takes Over Shopping Carts
17 augustus 2026 · 9 min
Our analysts Andrew Ruben and Nathan Feather discuss how AI shopping agents could transform how consumers discover, compare and buy products and the implications for eCommerce. Lees meer
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----- Transcript -----
Andrew Ruben: Welcome to Thoughts on the Market. I'm Andrew Ruben, Latin America Retail and E-commerce Analyst at Morgan Stanley.
Nathan Feather: And I'm Nathan Feather, U.S. Small and Mid-Cap Internet Analyst at Morgan Stanley.
Andrew Ruben: Today, what happens when the shopping cart starts thinking for itself and maybe even for you?
It's Monday, August 17th at 10am in New York.
As we think about trends that are driving e-commerce, which remains a share gainer within the overall retail landscape, it seems that there's a transformation that's quickly building around agentic e-commerce.
So, Nathan, I think it's timely for us to talk today as agentic seems like it could be the next catalyzer of growth and innovation within the e-commerce landscape.
Nathan Feather: How much bigger do we think agentic commerce could make the global e-commerce market?
Andrew Ruben: Global e-commerce as we see it is a nearly [$]5 trillion market today. That implies 22 percent of retail sales. The way we see over the next five years is a $7 trillion opportunity, with growth accelerating to a 9 percent compounded rate, up from about 7 percent over the past four years. And this is partly on the tailwinds from agentic.
What we see here is this broad arc of reducing friction with e-commerce over time.
Think about how easy it is now to pick up your phone, search for some inventory, click, and the goods can be here within one, two days, if not same day. That's reduction of friction that we think physical retail can't match, and the improvements of agentic commerce. Having this agent that can help you search, help you discover – that should further the e-commerce opportunity.
We think agentic alone could add about 6 percent to the five-year e-comm…