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Why Shutdown Standoff Raises Stakes for Healthcare
30 oktober 2025 · 6 min
Our analysts Ariana Salvatore and Erin Wright explain the pivotal role of healthcare in negotiations to end the government shutdown. Lees meer
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----- Transcript -----
Ariana Salvatore: Welcome to Thoughts on the Market. I'm Ariana Salvatore, Morgan Stanley's U.S. Public Policy Strategist.
Erin Wright: And I'm Erin Wright, U.S. Healthcare Services Analyst.
Ariana Salvatore: Today we'll talk about what the U.S. government shutdown means for healthcare.
It's Thursday, October 30th at 12pm in New York.
Thus far, it seems like markets haven't really been paying too much attention to the government shutdown.
Obviously, we're aware of the cumulative economic impact that builds every week that it lasts. But we haven't seen any movement from the political front either this week or last, which signals that it could be going on for a while longer. That being said, the end of this month is an important catalyst for a few reasons.
First of all, you have the potential rollover of SNAP benefits. You have another potential missed military paycheck. And most importantly, the open enrollment period for healthcare plans. Polling is still showing neither side coming out on top with a clear advantage.
Absent that changing, you probably need to see one of two things happen to have any movement forward on this front. Either more direct involvement from President Trump as he wraps up the APEC meeting or some sort of exogenous economic event, like a strike from air traffic controllers.
Those types of events obviously are difficult to predict this far in advance. But up until now we know that President Trump has not really been involved in the debate. And the FAA seems to be operating a little bit with delays, but as usual.
So, Erin, let's pivot to what's topical in here from a healthcare policy perspective. What are investors that you speak with paying the most attention to?
Erin Wright: You bring up some important points Ariana. But from a policy …
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M&A Poised to Gain Momentum
29 oktober 2025 · 4 min
Our Head of Corporate Credit Research Andrew Sheets explains why the recent revival of M&A activity has room to accelerate. Lees meer
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----- Transcript -----
Andrew Sheets: Welcome to Thoughts on the Market. I'm Andrew Sheets, Head of Corporate Credit Research at Morgan Stanley.
Today – a discussion of merger and acquisition activity or M&A. Last year, we had a view that this activity would pick up significantly. We think we're seeing that increase now. It has further to go.
It's Wednesday, October 29th at 2pm in London.
We have been firm believers at Morgan Stanley in a significant multi-year uplift in global merger and acquisition activity or M&A. That conviction remains. The incentives for this type of action are strong in our view; activity still lags what fundamentals would suggest, and supportive regulatory shifts are real.
M&A has now returned, and importantly, we think there's much further to go. Indeed, M&A is very closely linked to corporate confidence, and we think investors need to consider the possibility that we'll see an even bigger surge in this confidence – or a boom.
First, policy uncertainty is declining as U.S. tax legislation has now passed, and tariff rates get finalized. It's the relative direction of this uncertainty that we think matters most for corporate confidence.
Second, interest rates are declining with the Fed, European Central Bank, and Bank of England all set to cut rates further over the next 12 months. Third, bank capital requirements may decline in the view of Morgan Stanley analysts, which would unlock more lending for these types of transactions.
Fourth, and very importantly, the regulatory backdrop is becoming more accommodative in both the U.S. and in Europe. Indeed, we think that companies may think that this is going to be the most permissive regulatory window for transactions that they might get for some time. Fifth, private equity, which is a big driver of M&A activity, is sitting o…
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A Turnaround in Sight for Healthcare?
28 oktober 2025 · 6 min
Our U.S. Biotech and Biopharma analysts Sean Laaman and Terence Flynn discuss the latest developments that could be positioning the healthcare sector for strong outperformance. Lees meer
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----- Transcript -----
Sean Laaman: Welcome to Thoughts on the Market. I'm Sean Laaman, Morgan Stanley's U.S. Small and Mid-Cap Biotech Analyst.
Terence Flynn: And I'm Terence Flynn, Morgan Stanley's U.S. Biopharma Analyst.
Sean Laaman: Today, we'll discuss how a rally in the healthcare sector is being driven by more favorable macro conditions.
It's Tuesday, October 28th at 10am in New York.
So, Terence, healthcare has lagged the broader market year-to-date, and valuations have been near historical lows. But recent weeks show strengthening performance. Policy headwinds have been front and center.
What's changed in the regulatory environment and how is the biopharma sector adapting to these pricing and tariff dynamics?
Terence Flynn: Sean, as you know, with many other sectors, tariffs were initially a focus earlier this year. But a number of companies in our space have subsequently announced significant U.S. manufacturing investments to reshore supply chains. And hence, the market's less focused on tariffs in our space right now.
But the other policy dynamic and focus is what's called Most Favored Nation or MFN drug pricing. Now, this is where the President's been focused on aligning U.S. drug prices with those in other developed countries. And recently we've seen several companies announce agreements with the administration along these lines, which importantly has provided investors with more visibility here. And we're watching to see if additional agreements get announced.
Sean Laaman: Got it. Another hurdle for Large-cap biopharma is a looming expiration of patents with [$]177 billion exposed by 2030. How is this shaping M&A trends and strategic priorities?
Terence Flynn: For sure. I mean, as you know, Sean, patent expiry is our normal pa…
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Will the Stock Market Rally Continue?
27 oktober 2025 · 4 min
Our CIO and Chief U.S. Equity Strategist Mike Wilson discusses the outlook for stocks after the preliminary U.S.-China trade agreement and ahead of the Fed meeting and big tech earnings. 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.
Today on the podcast I’ll be discussing the remaining hurdles for equities after what appears to be a preliminary trade deal with China.
It's Monday, October 27th at 11:30am in New York.
So, let’s get after it.
Over the past few weeks, trade tensions between the U.S. and China escalated once again focused on rare earths and technology transfers with each country playing its strongest card. Over the weekend, it appears that we have at least a preliminary agreement to de-escalate these tensions which means avoiding prohibitively high tariffs that were scheduled to go on at the end of this month.
While we don’t have many details on what has been agreed to, it appears that critical rare earths will continue to ship to the U.S. while technology transfer restrictions by the U.S. to China will ease. Presumably, Fentanyl tariffs of 20 percent on China are likely to be part of any broader agreement between Presidents Trump and Xi, if they end up meeting at the upcoming Asia Pacific Economic Cooperation forum.
Given the sharp sell-off in stocks a few weeks ago on the news of trade tensions re-escalating, it’s not surprising that stocks are rallying sharply this morning on news of a possible deal from last week’s talks.
Our attention now turns to the other big events this week. First, the Federal Reserve is meeting tomorrow and Wednesday to decide its next move on monetary policy. There is a broad consensus view that the Fed will cut another 25 basis points but there are very different views about how they will address its balance sheet run-off known as quantitative tightening, or QT.
Based on my conversations, the…
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What Happens to Software Developers as AI Can Code?
24 oktober 2025 · 4 min
Our U.S. Software Analyst Sanjit Singh explains how AI is reshaping software development and why the future for the sector may be brighter – and busier – than ever. Lees meer
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----- Transcript -----
Welcome to Thoughts on the Market. I’m Sanjit Singh, the U.S. Software Analyst at Morgan Stanley.
Today: how AI is transforming software and what that means for developers.
It’s Friday, October 24th, at 10am in New York.
There's been a lot of news stories and anecdotal accounts about AI taking over jobs, especially in the software industry. You may have heard of vibe coding, where people can use natural language prompts, guiding AI to build software applications. So yes, AI is creating a world where software writes itself. But at the same time, the demand for human creativity only grows.
The introduction of AI coding assistants has dramatically expanded what software can do, fueling a surge in both the volume of code and the complexity of projects. But instead of shrinking the developer workforce, AI is actually supporting continued growth in developer headcount, even as productivity soars.
We’re estimating the software development market will grow at a 20 percent compound annual growth rate, reaching $61 billion by 2029. And that’s up from $24 billion in 2024. And in terms of the developer population, [research] firms like IDC expect it to jump from 30 million paid developers in 2024 to 50 million by 2029 – that’s a 10 percent annual growth rate. Even the most conservative estimates, like those from the U.S. Bureau of Labor Statistics, see developer jobs growing roughly 2 percent per year through 2033, outpacing overall employment growth.
So, what does this mean for people behind the code?
AI isn’t replacing developers. It’s redefining them. Routine tasks are increasingly handled by AI agents, and this frees up developers to become curators, reviewers, architects, and most important problem-solvers.
The upshot? Companies may need…
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Should AI Spending Worry Investors?
23 oktober 2025 · 4 min
Our Head of Corporate Credit Research Andrew Sheets wades into the debate around whether the boom in artificial intelligence investment is a warning sign for credit markets. Lees meer
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----- Transcript -----
Andrew Sheets: Welcome to Thoughts on the Market. I'm Andrew Sheets, Head of Corporate Credit Research at Morgan Stanley.
Today – the debate about whether elevated capital expenditure and AI technology is showing classic warning signs of overbuilding and worries for credit.
It's Thursday, October 23rd at 2pm in London.
Two things are true. AI related investment will be one of the largest investment cycles of this generation. And there is a long history of major investment cycles causing major headaches to the credit market. From the railroads to electrification, to the internet to shale oil, there are a number of instances where heavy investment created credit weakness, even when the underlying technology was highly successful.
So, let's dig into this and why we think this AI CapEx cycle actually has much further to run.
First, Morgan Stanley has done a lot of good collaborative in-depth work on where the AI related spend is coming from and what's still in the pipeline. And importantly, most of the spending that we expect is still well ahead of us. It's only really ramping up starting now.
Next, we think that AI is seen as the most important technology of the next decade by some of the biggest, most profitable companies on the planet. We think this increases their willingness to invest and stick with those investments, even if there's a lot of uncertainty around what the return on all of this expenditure will ultimately be.
Third, unlike some other major recent capital expenditure cycles – be they the internet of the late 1990s or shale oil of the mid 2010s, both of which were challenging for credit – much of the spending that we're seeing today on AI is backed by companies with extremely strong balance sheets and signific…
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The Next Turning Points in Tech
22 oktober 2025 · 11 min
Our analysts Brian Nowak, Keith Weiss and Matt Bombassei break down the most important tech insights from Morgan Stanley’s Spark Private Company Conference and industry shifts that will likely shape 2026 and beyond. Lees meer
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----- Transcript -----
Brian Nowak: Welcome to Thoughts on the Market. I'm Brian Nowak, Morgan Stanley's Head of U.S. Internet Research. I'm joined today by Keith Weiss, Head of U.S. Software Research and Matt Bombassei from my team.
Today we're going to talk about private companies and technology – and how they're showing us the direction of travel for disruptive technologies and emerging investment opportunities.
It's Wednesday, October 22nd at 10am in New York.
Keith and Matt, we just returned from Morgan Stanley's Spark Private Company Conference last week in Los Angeles. It had over 85 private tech companies, 150 plus investor firms. There were a lot of themes that were discussed across the entire tech space impacting a lot of different sectors, including energy, healthcare, financial services, and cybersecurity.
Keith, what were some of the biggest takeaways you took away from Spark this year?
Keith Weiss: I'd say just to start off with, the Spark Conference is one of my favorite conferences of the year. It's a more intimate conference where you really get to spend time with both the private company executives and founders, as well as investors from the VC community and public company investors. And the conversations are more broad ranging; they're more about the thematics in the industry. They're more long term in nature.
So, it's not just a conversation about what's next quarter going to look like, or what data points are you drumming up. You're having these thoughtful conversations about what's going on in the industry and how that's going to impact business models, how it's going to impact innovation cycles, how it's going to impact pricing models, within these companies. So, it tends to be a ve…
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How to Navigate U.S.-China Tensions
21 oktober 2025 · 4 min
Our Global Head of Fixed Income Research and Public Policy Michael Zezas discuss the latest developments in U.S.-China relations and how they could affect investors. Lees meer
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----- Transcript -----
Welcome to Thoughts on the Market. I’m Michael Zezas, Global Head of Fixed Income Research and Public Policy Strategy.
Today, we’re talking about the U.S. and China—why the relationship remains complicated, and what it means for markets.
It’s Tuesday, Oct 21st, at 12:30pm in New York.
If you’ve been following headlines, you know that U.S.-China relations are rarely out of the news. But beneath the surface, the dynamics are more nuanced than the daily soundbytes suggest. Investors often ask: Are we headed for a decoupling of the two economies, or is there room for cooperation?
The answer, as always, is—it’s complicated.
Let’s start with the basics. The U.S. and China are deeply intertwined economically, but strategic competition has intensified. Recent years have seen tariffs, export controls, and restrictions on technology transfer. Yet, there’s still plenty of trade between the two countries, and both economies are dependent on each other for growth and innovation.
So what’s going on now?
In recent weeks, China has moved to tighten rare earth export controls and the U.S. has proposed 100 percent tariffs in return. If this came to pass, these events could mark a clear economic split. But given the interdependencies we just cited, neither Washington nor Beijing seems eager for a true split, at least not anytime soon. The economic costs would be staggering, and both sides know it. So, a truce seems more likely, perhaps with somewhat different terms than the narrow semis-for-rare earths agreement they made this spring. And longer term, this episode seems to be a part of a broader dynamic, where rolling negotiations and truces are more likely than either a durable trade peace or a hard economic decoupling.
For fixed income investors,…
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Time for a Bull Market Correction?
20 oktober 2025 · 5 min
As the S&P 500 continues to rally, our CIO and Chief U.S. Equity Strategist Mike Wilson discusses three factors that could lead to a stock market correction in the near term. 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. Today on the podcast I'll be discussing why we are still in a new bull market even if a correction is likely in the near term.
It's Monday, October 20th at 1pm in New York.
So, let's get after it.
I continue to believe the sharp selloff in April following Liberation Day marked the trough of what was effectively a three-year rolling recession in the U.S. economy. We have written extensively about this view; but it still remains very much out of consensus.
Since 2022 most sectors of the private economy have gone through their own individual recession but at different times. The final trough in the rate of change in economic activity came in April around the tariff announcements which came as a surprise to almost everyone, at least in terms of the magnitude and scope.
In short, Liberation Day was really capitulation day on the last piece of bad news for the economic cycle which then bottomed.
Stocks seem to agree which is why they have rallied in a straight line since then, much like they do after the trough in any economic cycle. The other proof we have for this claim is the v-shaped recovery in earnings revision breadth, something we have discussed for many months in our written research and on this podcast.
Based on our numerous conversations with investors, this view remains very unpopular. Instead, most believe the economy and earnings growth for next year are at risk of being lower rather than higher than expected, as I do. Core to my view is that we are now firmly in an inflationary regime since COVID and the implementation of helicopter money to get us out of that crisis. The government has to run it hot to get …
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U.S.-China Tensions: What Could Happen Next?
17 oktober 2025 · 5 min
Our U.S. Public Policy Strategist Ariana Salvatore unpacks how China’s announced rare earth export controls and signals of sweeping U.S. tariffs could impact global supply chains, markets and economic growth. Lees meer
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----- Transcript -----
Ariana Salvatore: Welcome to Thoughts on the Market. I'm Ariana Salvatore, Morgan Stanley's U.S. Public Policy Strategist.
Today I'll talk about a development keeping markets and investors on alert: a re-escalation of U.S. China trade tensions.
It's Friday, October 17th at 10am in New York.
Since April, the U.S. and China have been in what we've been calling a very delicate detente. Remember, President Trump paused the additional reciprocal tariffs after Liberation Day.
Since then, we've been consistently skeptical that the pause was durable enough to actually allow the U.S. and China to come up with a full-fledged trade agreement. But now we're equally as skeptical that the current escalation will lead to a material disruption in the bilateral relationship.
So, what happened last week? China announced stricter export controls on rare earths, which are really critical for manufacturing everything from electric vehicles to defense equipment and advanced electronics. So, in response, the Trump administration on Friday announced a proposed 100 percent tariff, said to go into effect November 1st across all Chinese exports to the U.S. That date matters because that's around the same time that Presidents Trump and Xi were scheduled to meet at the upcoming APEC Summit in South Korea.
When we think about this most recent escalation, it's pretty significant because China accounts for about 70 percent of global rare earth mining, and 90 percent of processing and refining. A lot of countries around the world – the U.S. Japan, Korea, and Germany – all rely heavily on these imports from China. And so potential new export controls mean that every economy may have to start negotiating bilaterally with Ch…
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Credit Market’s Three Big Debates
16 oktober 2025 · 11 min
With Morgan Stanley’s European Leveraged Finance Conference underway, our Head of Corporate Credit Research Andrew Sheets joins Chief Fixed Income Strategist Vishy Tirupattur to discuss private credit, M&A activity and AI infrastructure. Lees meer
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----- Transcript -----
Andrew Sheets: Welcome to Thoughts on the Market. I'm Andrew Sheets, Head of Corporate Credit Research at Morgan Stanley
Vishy Tirupattur: And I'm Vishy Tirupattur, Morgan Stanley's Chief Fixed Income Strategist.
Andrew Sheets: Today, as we're hosting the Morgan Stanley European Leveraged Finance Conference, a discussion of three of the biggest topics on the minds of credit investors worldwide.
It's Thursday, October 16th at 4pm in London.
Vishy, it's so great to catch up with you here in London. I know you've been running around the world, quite literally, talking to investors about some of the biggest debates in credit – and that's exactly what we wanted to talk. We're here at Morgan Stanley's European Leveraged Finance Conference. We're talking with investors about the biggest debates, the biggest developments in credit markets, and there are really kind of three topics that stand out.
There's what's going on with private credit? What's going on with the merger and acquisition, the M&A cycle? And how are we going to fund all of this AI infrastructure?
And so maybe I'll throw the first question to you. We hear a lot about private credit, and so maybe just for the listener who's looking at a lot of different things. First, how do you define it? What are we really talking about when we're talking about private credit?
Vishy Tirupattur: So, Andrew, when we talk about private credit, the most common understanding of private credit is lending by non-banks to small and medium sized companies. And we probably will discuss a bit later that this definition is actually expanding much beyond this narrow definition. So, when you think about private credit and spend time…
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How Politics Affect Global Markets
15 oktober 2025 · 5 min
Political developments in Japan and France have brought more volatility to sovereign debt markets. Our Global Economist Arunima Sinha highlights the risks investors need to watch out for. Lees meer
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----- Transcript -----
Political developments in Japan and France have brought more volatility to sovereign debt markets. Our Global Economist Arunima Sinha highlights the risks investors need to watch out for.
Arunima Sinha: Welcome to Thoughts on the Market. I'm Arunima Sinha, from Morgan Stanley's Global and U.S. Economics teams.
Today, I'm going to talk about sovereign debt outlooks and elections around the world.
It's Wednesday, October 15th at 10am in New York.
Last week we wrote about the deterioration of sovereign debt and fiscal outlooks; and right on cue, real life served up a scenario. Elections in Japan and another political upheaval in France drove a reaction in long-end interest rates with fiscal outlooks becoming part of the political narrative. Though markets have largely stabilized now, the volatility should keep the topic of debt and fiscal outlooks on stage.
In Japan, the ruling Liberal Democratic Party, the LDP, elected Sanae Takaichi as its new leader in something of a surprise to markets. Takaichi's election sets the stage for the first female prime minister of Japan since the cabinet system was established in 1885.
That outcome is not assured, however. And recent news suggests that the final decision is a few weeks away. The landmark movement in Japanese post-war politics, in some ways further solidifies the changing tides in the Japanese political economy. Markets have positioned for Takaichi to further the reflation trade in Japan and further support the nominal growth revival.
The Japanese curve twists steepened sharply as Tokyo markets reopened with the long-end selling off by 14 basis points amid intensifying fiscal concerns and the unwinding of pre-election flattener positions. Specifically, expectation…
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Asia’s Youth Job Crisis
14 oktober 2025 · 4 min
Our Chief Asia Economist Chetan Ahya discusses how youth unemployment will impact future growth and stability across China, India, and Indonesia. Lees meer
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----- Transcript -----
Welcome to Thoughts on the Market. I’m Chetan Ahya, Morgan Stanley’s Chief Asia Economist.
Today – Asia’s young workforce is facing a significant challenge. How a soft labor market will shape everything from consumer demand to social stability and long-term growth.
It’s Tuesday, October 14th, at 2pm in Hong Kong.
Across Asia, a concerning trend is emerging. The region’s younger generations face mounting challenges in the job market.
Asia’s youth unemployment averages 16 percent, which is much higher than the U.S. rate of 10.5 percent. Youth unemployment rates are running two to three times higher than headline unemployment rates. The underlying situation is even weaker than what is represented by [the] unemployment rate.
And within Asia, the challenge is most acute in China, India, and Indonesia, the three most populous economies. Youth unemployment rates for these three economies are running close to double, as compared to other economies in Asia.
Now let’s take a closer look at China. The urban youth unemployment rate, i.e. for 16–24-year-olds, has steadily increased since 2019.
What’s driving this rise in unemployment? A mismatch in labor demand and supply. The number of university graduates surged 40 percent over the last five years to close to 12 million. But economy-wide employment has declined by 20 million over the same period. Entry-level wages are sluggish, and automation plus subdued services growth mean fewer opportunities for newer entrants.
Turning to India, their unemployment rate is the highest in the region at 17.6 percent. Employment creation has been subdued. And on top of it, India also faces another issue: underemployment. Post-COVID, primary sector – i.e. farming and mining – employment rose by 50 million, reaching a 17-year hi…
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An M&A Boom for Financials
13 oktober 2025 · 10 min
Morgan Stanley analysts Betsy Graseck and Michael Cyprys discuss what’s driving unprecedented consolidation for asset and wealth management firms. Lees meer
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----- Transcript -----
Betsy Graseck: Welcome to Thoughts on the Market. I'm Betsy Graseck, Morgan Stanley's U.S. Large Cap Banks Analyst and 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.
Betsy Graseck: The asset management and wealth management industries are on the cusp of major consolidation. We're going to unpack today what's driving the race for scale and what it means for investors and the industries at large.
It’s Monday, October 13th at 4pm in New York.
Mike, before we dive into the setup for M&A, I did want to get out here on the table. What's your outlook for the asset management industry?
Michael Cyprys: Sure. So, asset management today is, call it, $135 trillion industry, in terms of assets under management that are managed for a fee. We expect it to grow at about an 8 percent clip annually over the next five years. And that's driven by faster growth in private markets, solutions and passive strategies, while we expect to see slower growth in the core active arena.
Two key drivers of growth there. First private markets. We expect to see rising investor allocations from both institutional investors, but also more importantly from retail investors that remain early days in accessing the asset class. So, as we look out in the coming years, we do expect this democratization of private markets to play out, and we see that being helped by product innovation, investor education and technology advances that are all helping unlock access.
Second growth driver is solutions. And I think you're looking at me a little dazed on what's solutions. And by that we really mean products and strategies that are addressing demographic challenges around aging populations. So, t…
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An Unprecedented Wave of Inheritances Is Coming
10 oktober 2025 · 4 min
Our U.S. Thematic and Equity Strategist Michelle Weaver discusses how the largest intergenerational wealth transfer in history could reshape saving, spending and investment behavior across America. Lees meer
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----- Transcript -----
Michelle Weaver: Welcome to Thoughts on the Market. I'm Michelle Weaver, Morgan Stanley's U.S. Thematic and Equity Strategist.
Today, a powerful force reshaping the financial lives of millions of Americans: inheritance.
It's Friday, October 10th at 10am in New York.
Americans are living longer and they're passing on their wealth later. Longevity is one of Morgan Stanley Research's four key themes, and this is an interesting element of longevity. As baby boomers age, they're expected to transfer their wealth to Gen X, millennials and Gen Z to the tune of tens or even hundreds of trillions of U.S. dollars.
Estimates vary widely, but the amounts are unprecedented. And so, inheritance isn't just a family milestone; it's becoming an important cornerstone of financial planning and longevity. And understanding who's receiving, expecting, and using their inheritances is key to forecasting how Americans save, spend, and invest.
According to our latest AlphaWise survey, 17 percent of U.S. consumers have received an inheritance, and another 14 percent expect to receive one in the future. Younger Americans are especially optimistic. Their expectations split evenly between those anticipating an inheritance within the next 10 years and those expecting it further out.
But here's the kicker; income plays a huge role. Only 17 percent of lower income consumers report receiving or expecting an inheritance, but that number jumps to 43 percent among higher income households highlighting a clear wealth divide.
What about the size of the inheritance? In our survey, those who received or expect to receive an inheritance fall broadly into three categories. About half reported amounts under $100,000 dollars. For about a thir…
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Lessons From a Bond Issued 90 Years Ago
9 oktober 2025 · 4 min
Diving into the history of Morgan Stanley’s first bond deal, our Head of Corporate Credit Research Andrew Sheets explains the value of high-quality corporate bonds. Lees meer
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----- Transcript -----
Andrew Sheets: Welcome to Thoughts on the Market. I'm Andrew Sheets, Head of Corporate Credit Research at Morgan Stanley.
Today, a look at the first bond that Morgan Stanley helped issue 90 years ago and what it might tell us about market uncertainty.
It's Thursday, October 9th at 4pm in London.
In times of uncertainty, it's common to turn to history. And this we think also applies to financial markets. The Great Depression began roughly 95 years ago. Of its many causes, one was that the same banks that were shepherding customer deposits were also involved in much riskier and more volatile financial market activity.
And so, when the stock market crashed, falling over 40 percent in 1929, and ultimately 86 percent from a peak to a trough in 1932, unsuspecting depositors often found their banks overwhelmed by this market maelstrom.
The Roosevelt administration took office in March of 1933 and set about trying to pick up the pieces. Many core aspects that we associate with modern financial life from FDIC insurance to social security to the somewhat unique American 30-year mortgage rose directly out of policies from this administration and the financial ashes of this period.
There was also quite understandably, a desire to make banking safer. And so the Glass Steagall Act mandated that banks had a choice. They could either do the traditional deposit taking and lending, or they could be active in financial market trading and underwriting. In response to these new separations, Morgan Stanley was founded 90 years ago in 1935 to do the latter.
It was a very uncertain time. The U.S. economy was starting to recover under President Roosevelt's New Deal policies, but unemployment was still over 17 percent. Europe's economy was struggling, and t…
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When Will the Shutdown Affect Markets?
8 oktober 2025 · 3 min
An extended U.S. government shutdown raises the risk for weaker growth potential. Our Global Head of Fixed Income Research and Public Policy Strategy Michael Zezas suggests key checkpoints that investors should keep in mind. Lees meer
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----- Transcript -----
Welcome to Thoughts on the Market. I'm Michael Zezas, Global Head of Fixed Income Research and Public Policy Strategy.
Today: Three checkpoints we’re watching for as the U.S. government shutdown continues.
It’s Wednesday, October 8th at 10:30am in New York.
The federal government shutdown in the United States has crossed the one week mark. But if you’re watching the markets, you might be surprised at how calm everything seems. Stocks are steady. Bond yields haven’t moved much, and volatility’s low.
It’s more or less the scenario my colleague Ariana and I had talked about in anticipation of the impasse in Washington. We’d noted the potential for uncertainty for investors and market reaction depending on how long the shutdown would last.
So that raises a big question: what, if anything, about this government shutdown could shake investor confidence and start moving markets?
The question is worth considering. Prediction markets now suggest the most likely outcome is that the government shutdown will not end for at least another week. And as we’ve seen in past shutdowns, the longer it drags on, the more likely it is to matter. That’s because risks to the economic outlook start to accumulate, and investors eventually have to start pricing in a weaker growth outlook.
There’s a few checkpoints we’re watching for – for when investors might start feeling this way.
First, the missed paycheck for furloughed federal workers. The first instance of this comes in a few days. Less pay naturally means less spending. Studies suggest that spending among affected workers can drop by two to four percent during a shutdown. That’s not huge for GDP at first; but it’s a sign the shutdown is havin…
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Get Ready for a Steeper Yield Curve
7 oktober 2025 · 3 min
Our Fixed Income Strategist Vishy Tirupattur explains how changes in the yield curve are affecting markets such as insurance, Treasury yields and mortgage rates. 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 – How the shape of the yield curve has affected credit and housing markets, and the risk of changes to the curve and its implications.
It’s Tuesday, October 7th at 1pm in New York.
The shape of the yield curve plays a pivotal role in financial markets. It influences everything from credit conditions to housing and mortgage dynamics. And you’ve been hearing on this show for some time about more Fed rate cuts coming. Our economists expect 25 basis point rate cuts at the next three meetings – that is October, December and January. And then two more in April and July of next year.
What does this mean to the shape of the curve? Our high conviction call has been that investors should position for a steeper yield curve. Why does the curve matter? It’s not just a macro signal. It’s a transmission mechanism that shapes pricing, risk appetite, and sector flows.
Take life insurers, for example. A steeper curve has turbocharged demand for fixed annuity products, which in turn drives flows into spread assets like corporate and securitized credit. Insurance demand has become a powerful technical in credit markets.
This year’s steepening has been led by falling front-end yields. For example, 2-year Treasuries are down about 60 basis points, significantly outpacing the 40 basis point drop in 10-year yields and just 5 basis point drop in 30-year yields. That front-end move reflects shifting rate expectations and offers relief to highly leveraged issuers who rely on short-term funding.
But longer-dated yields remain sticky, keeping all-in borrowing costs elevated. That is good for insurers – and the sale of fixed annuity pro…
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How Asia Is Reinventing Itself for Global Competition
6 oktober 2025 · 10 min
Our strategists Daniel Blake and Tim Chan discuss how Asia is adapting to multipolar world dynamics, tech innovation and longevity trends to create new opportunities for global investors. Lees meer
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----- Transcript -----
Daniel Blake: Welcome to Thoughts on the Market. I'm Daniel Blake, Morgan Stanley's Asia Equity and Thematic Strategist.
Tim Chan: And I'm Tim Chan, Morgan Stanley Head of Asia Sustainability Research and Thematic Strategist
Daniel Blake: Today, how Asia is reshaping its development strategy, corporate governance, and capital markets to lead globally.
It's Monday, October 6th at 8am in Singapore.
Tim Chan: And it's also 8am in Hong Kong.
Daniel Blake: Asia is experiencing a number of dramatic changes that are reshaping industries, even entire economies. Deglobalization, supply chain shifts, frenetic investment in AI and looming disruption from the adoption of the technology, rapid energy transformation, and the transition to super aged populations as longevity drives investment in innovative healthcare and better nutrition are just some of the overarching themes. Asia's transformation is a story every global investor needs to follow and look for opportunities in.
Tim Chan: So, what are the overarching themes, when you look at Asia Pacific? For example, what are the key themes that you're seeing in terms of driving the equity return and the market trend that you're seeing?
Daniel Blake: We're approaching the Asia thematic opportunity from the framework of a competitive reinvention. It's competitive because this is deeply rooted in the cultural and business norms across much of the region, which has had an export focus through the modernization process in Japan, and more broadly with the emergence of the Asia Tigers.
But we're seeing this competition really stepping up another notch. As countries look at how they can take market share in emerging technologies, and also this overarching competition between the …
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Introducing: What Should I Do With My Money: Season 3
4 oktober 2025 · 2 min
Have you ever wondered -- How much do I really need to retire early and am I on track? How do I balance all of my financial goals? How can I help my children be financially secure? Tune into Season 3 of What Should I Do With My Money, hosted by Morgan Stanley Wealth Management’s Jamie Roô to hear real-life stories about these and other big financial questions. Lees meer
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China’s Biotech Revolution
3 oktober 2025 · 3 min
Our China Healthcare Analyst Jack Lin discusses how China’s biotech surge is reshaping healthcare, investment and innovation worldwide. Lees meer
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----- Transcript -----
Jack Lin: Welcome to Thoughts on the Market. I'm Jack Lin, from Morgan Stanley's China Healthcare Team.
Today, the boom in China biotech – and how it's not just a headline for China-focused investors, but a story that touches all of us.
It is Friday, October 3rd at 2pm in Hong Kong.
Many people might not realize this but some of the next generation healthcare innovation is being developed far from Silicon Valley and Wall Street. The medicines you rely on, treatment plans that could shape your family's future, even investment opportunity that can grow your savings. They are all increasingly influenced by China's rapidly evolving biotech sector, which is transitioning from traditional generics manufacturing into the global innovation ecosystem.
In fact, China's biotech industry is set to become a major player in the global innovation ecosystem. By 2040, we project China's originated assets could represent about a third of U.S. FDA approvals – up dramatically from just 5 percent today. And the question isn't if China's biotech will matter, but how global patients could benefit; and how consumers and investors worldwide might engage with its impact.
What's driving this transformation?
Three key components are driving the globalization of China originated drug innovations: cost, accessibility, and innovation quality. Lower cost in China's biotech sector enables more efficient development. Clinical trial quality is improving with regulatory pathways becoming more streamlined, promoting accessibility of China innovation for global markets. Finally, innovation in China's biotech sector is gaining momentum with more regionally developed medicines now eyeing market approval from leading overseas agencies like the U.S. FDA and EMA.
This is all to say China is on track to…
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Opportunities From China’s Policy Shifts
2 oktober 2025 · 5 min
Our Chief China Equity Strategist Laura Wang discusses how China’s new approach to economic development is transforming domestic industries and reshaping the global investment landscape. Lees meer
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----- Transcript -----
Welcome to Thoughts on the Market. I’m Laura Wang, Morgan Stanley’s Chief China Equity Strategist.
Today – a consequential shift in China's economic policy is set to reshape domestic markets and send ripples across the global economy.
It’s Thursday, October 2nd at 2pm in Hong Kong.
If you’re an investor, it’s important to understand China’s new approach to economic development. The government's policies to drive a recovery from an economic slump are changing the rules of competition, profitability and growth. This affects Chinese companies, and in turn global supply chains and investment flows.
Let’s start with the term involution – what is it? In China, involution describes a cycle of excessive competition—think companies fighting for market share by slashing prices, ramping up production, and eroding profits, often to the point where nobody wins. The government’s anti-involution campaign is a direct response to this problem.
What factors prompted the launch of this anti-involution initiative? Since 2021, China has faced mounting deflationary pressures—falling prices, a housing market slump, and a surge in manufacturing investment that led to overcapacity. The September 2024 policy pivot began to address these issues, and in mid-2025 the government launched a more targeted anti-involution campaign. This phase focuses on reducing excessive competition and restoring pricing power through market-based consolidation.
As we assess the potential effectiveness of China’s anti-involution policy, our base case projects China’s return on equity (ROE) to reach 13.3 percent by 2030, up from a cycle low of 10 percent in May 2024 and 11.6 percent by July 2025. In a bullish scenario, decisive reforms and demand-side stimulus…
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Will U.S. Inflation Slow in 2026?
1 oktober 2025 · 13 min
In the second of a two-part episode, Morgan Stanley’s chief economists talk about their near-term U.S. outlook based on tariffs, labor supply and the Fed’s response. They also discuss India’s path to strong economic growth. 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. Yesterday I sat down with my colleagues, Mike Gapen, Chetan Ahya and Jens Eisenschmidt, who cover the U.S., Asia, and Europe respectively. We talked about... Well, we didn't get to the U.S. We talked about Asia. We talked about Europe.
Today, we are going to focus on the U.S. and maybe one or two more economies around the world.
It's Wednesday, October 1st at 10am in New York.
Jens Eisenschmidt: And 4pm in Frankfurt.
Chetan Ahya: And 10 pm in Hong Kong.
All right, gentlemen. So yesterday we talked a lot about China, the anti-involution policy, and what's going on with deflation there. Talked a little bit about Japan and what the Bank of Japan is doing. We shifted over to Europe and what the ECB is doing there – there were lots of questions about deflation, disinflation, whether or not inflation might actually pick up in Japan. So, [that] was all about soft inflation.
Mike, let me put you on the spot here, because things are, well, things are a little bit different in the U.S. when it comes to inflation. A lot of attention on tariffs and whether or not tariffs are going to drive up inflation. Of course, inflation, the United States never got back to the Fed's target after the COVID surge of inflation.
So, where do you see inflation going? Is the effect of tariffs – has that fully run its course, or is there still more entrained? How do you see the outlook for inflation in the U.S.?
Michael Gapen: Yeah, certainly a key question for the outlook here. So, core PCE inflation is running around 2.9 percent. We think it can get towards 3, maybe a little above 3 by year e…
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Tackling Economic Hurdles in Europe and Asia
1 oktober 2025 · 13 min
Morgan Stanley’s chief economists discuss how policymakers in China, Japan and the European Union are addressing slower growth, deflation or the return of inflationary pressures. 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.
Well, a lot has changed since the second quarter and the last time we did one of these around the world economics roundtable. After an extended pause, the United States Federal Reserve started cutting rates again. Europe's recovery is showing, well, some mixed signals. And in Asia, there's once again increasing reliance on policy support to keep growth on track.
Today for the first part of a two-part conversation, I'm going to engage with Chetan Ahya, our Chief Asia economist, and Jens Eisenschmidt, our Chief Europe economist, to really get into a conversation about what's going on in the economy around the world.
It's Tuesday, September 30th at 10am in New York.
Jens Eisenschmidt: And 4pm in Frankfurt.
Chetan Ahya: And 10pm in Hong
Seth Carpenter: So, it's getting to be the end of the third quarter, and the narrative around the world is still quite murky from my perspective. The Fed has delivered on a rate cut. The ECB has decided that maybe disinflation is over. And in Asia, China's policymakers are trying to lean in and push policy to right the wrongs of deflation in that economy.
I want to get into some of the real hard questions that investors around the world are asking in terms of what's going on in the economy, how it's working out, and what we should look for. So, Chetan, if I can actually start with you. One of the terms that we've heard a lot coming out of China is the anti-involution policy.
Can you just lay out briefly for us, what do we mean when we say the anti-involution policy in China?
Chetan Ahya: Well, the anti-evolution policy is a response to China's excess capacity and persistent def…
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Will the Fed End the Party?
29 september 2025 · 4 min
Despite large deficits, booming capital expenditures and a looser regulatory environment, the Fed appears poised to cut rates further to support the slowing labor market. This could set the stage for a level of corporate risk-taking not seen since the 1990s. Lees meer
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----- Transcript -----
Andrew Sheets: Welcome to Thoughts on the Market. I'm Andrew Sheets, Head of Corporate Credit Research at Morgan Stanley.
Today, a look at the forces that could heat up corporate activity in 2026 – if the labor market can hold up.
It's Monday, September 29th at 2pm in London.
Bill Martin, a former chairman of the Federal Reserve in the 50’s and 60’s, famously joked that “it was the Fed's job to take away the punch bowl just when the party is getting good.”
That quote seems relevant because a host of trends are pointing to a pretty lively scene over the next 12 months. First, the U.S. government is spending significantly more than it's taking in. This deficit running at about 6.5 percent of the size of the whole economy is providing stimulus. It's only been larger during the great financial crisis, COVID and World War II. It's punch.
Next to the corporate sector. As you've heard us discuss on this podcast, we here at Morgan Stanley think that AI related spending could amount to one of the largest waves of investment ever recorded – dwarfing the shale boom of the 2010s and the telecommunication spending of the late 1990s. Importantly, we think this spending is ramping up right now. Morgan Stanley estimates that investments by large tech companies will increase by 70 percent this year, and between 2024 and 2027, we think this spending is going to go up by two and a half times. Note that this doesn't even account for the enormous amount of power and electricity infrastructure that's going to be need to be built to support all this. Hence more economic punch.
Finally, there's a deregulatory push. My bank research colleagues believe that lower ca…
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Investors Monitor Washington’s Ticking Budget Clock
26 september 2025 · 5 min
Our Global Head of Thematic and Fixed Income Research Michael Zezas and our U.S. Public Policy Strategist Ariana Salvatore unpack the market and economic implications of a looming government shutdown. Lees meer
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Michael Zezas: Welcome to Thoughts on the Market. I'm Michael Zezas, Morgan Stanley's Global Head of Fixed Income Research and Public Policy Strategy.
Ariana Salvatore: And I'm Ariana Salvatore, U.S. Public Policy Strategist.
Michael Zezas: Today, our focus is once again on Washington – as the U.S. government fiscal year draws to a close and a potential government shutdown hangs in the balance.
It's Friday, September 26th at noon in New York.
Ariana we're just four days away from the end of the month. By October 1st, Congress needs to have a funding agreement in place, or we risk a potential shutdown. To that point, Democrats and Republicans seem far apart on the deal to avoid a shutdown. What's the state of play?
Ariana Salvatore: Right now, Republicans are pushing for what's called a clean continuing resolution. That's a bill that would keep funding levels flat while putting more time on the clock for negotiators to hammer out full fiscal year appropriations. And the CR they're proposing lasts until November 21st.
Democrats, conversely, are seeking to tie government funding to legislative compromise in other areas, including the enhanced Obamacare or ACA subsidies, and potential spending cuts to Medicaid from the One Big Beautiful Bill Act, which Republicans signed earlier this year. Remember, even though Republicans hold a majority in both chambers, this has to be a bipartisan agreement because of exactly how thin those margins of control are.
But Mike, it seems as we get closer, investors are asking more infrequently whether or not a shutdown is happening – and are more interested in how long it could potentially last. What are we thinking there?
Michael Zezas: So, it's hard to know. Shutdow…
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When Will the U.S. Housing Market Reactivate?
26 september 2025 · 15 min
Our Co-Head of Securitized Products Research James Egan joins our Chief Economic Strategist Ellen Zentner to discuss the recent challenges facing the U.S. housing market, and the path forward for home buyers and investors. Lees meer
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James Egan: Welcome to Thoughts on the Market. I'm James Egan, U.S. Housing Strategist and Co-Head of Securitized Products Research for Morgan Stanley.
Ellen Zentner: And I'm Ellen Zentner, Chief Economic Strategist and Global Head of Thematic and Macro Investing at Morgan Stanley Wealth Management.
James Egan: And today we dive into a topic that touches nearly every American household, quite literally. The future of the U.S. housing market.
It's Thursday, September 25th at 10am in New York.
So, Ellen, this conversation couldn't be timelier. Last week, the Fed cut interest rates by 25 basis points, and our chief U.S. Economist, Mike Gapen expects three more consecutive 25 basis point cuts through January of next year. And that's going to be followed by two more 25 basis point cuts in April and July.
But mortgage rates, they're not tied to fed funds. So even if we do get 6.25 bps cuts by the end of 2026, that in and of itself we don't think is going to be sufficient to bring down mortgage rates, though other factors could get us there.
Taking all that into account, the U.S. housing market appears to be a little stuck. The big question on investors' minds is – what's next for housing and what does that mean for the broader economy?
Ellen Zentner: Well, I don't like the word stuck. There's no churn in the housing market. We want to see things moving and shaking. We want to see sellers out there. We want to see buyers out there. And we've got a lot of buyers – or would be buyers, right? But not a lot of sellers. And, you know, the economy does well when things are moving and shaking because there's a lot of home related spending that goes on when we're selling and buying homes. …
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Capital Markets Pick Up as U.S. Policy Settles
24 september 2025 · 4 min
Our Global Head of Fixed Income Research and Public Policy Strategy, Michael Zezas, examines growth in IPOs and M&A amid greater certainty around trade, immigration and regulation. Lees meer
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----- Transcript -----
Welcome to Thoughts on the Market. I'm Michael Zezas, Global Head of Fixed Income Research and Public Policy Strategy.
Today, let’s talk about how changes in U.S. policy are shaping the markets in 2025—and why we’re seeing a pickup in capital markets activity.
It’s Wednesday, September 24th at 10:30am in New York.
At the start of this year, one thing investors agreed on was that with President Trump back in office, U.S. policy would shift in big ways. But there was less agreement about what those changes would mean for the economy and markets. Our team built a framework to help investors track changes in trade, fiscal, immigration, and regulatory policy – focusing on the sequencing and severity of these choices. That lens remains useful. But now, 250 days into the administration, we think it’s more valuable to look at the impacts of those shifts, the durable policy signals, and how markets are pricing it all.
Let’s start with policy uncertainty. It is still high, but it’s come down from the peaks we saw earlier this year. For example, the White House has made deals with key trading partners, which means tariff escalation is on pause for now. Of course, things could change if those partners don’t meet their commitments, but any fallout may take a while to show up. Even if courts challenge new tariffs, the administration has ways to bring them back. And with Congress divided, most big policy moves are coming from the executive branch, not lawmakers.
With policy changes slowing down, it’s worth reflecting on a new durable consensus in Washington. For years, both parties mostly agreed on lowering trade barriers and keeping the government out of private business. But it seems that’s changed. Industrial policy—where the gov…
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A Good ‘Perfect Storm’ for India
23 september 2025 · 12 min
Our Head of India Research Ridham Desai and leaders from Morgan Stanley Investment Management Arjun Saigal and Jitania Kandhari discuss how India’s promising macroeconomic trajectory and robust capital markets are attracting more interest from global investors. Lees meer
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Ridham Desai: Welcome to Thoughts on the Market. I'm Ridham Desai, Morgan Stanley’s Head of India Equity Research and Chief India Equity Strategist.
Today, the once in a generation investment opportunities Morgan Stanley sees in India.
Joining me in the studio, Arjun Saigal, Co-Head of Morgan Stanley Investment Management at India Private Equity, and Jitania Khandari, Morgan Stanley Investment Management, Head of Macros and Thematic Research for EM Public Equity.
It’s Tuesday, September 23rd at 4pm in Mumbai.
Jitania Kandhari: And 6:30am in New York.
Ridham Desai: Right now, India is already the world's fourth largest economy, and we believe it's on track to becoming the third largest by the end of this decade.
If you've been following our coverage, you know, Morgan Stanley has been optimistic about India's future for quite some time. It's really a perfect storm – in a good way.
India has got a growing young workforce, steady inflation, and is benefiting from some big shifts in the global landscape. When you put all of that together, you get a country that's set up for long-term growth. Of course, India is also facing pressure from escalating tariffs with the U.S., which makes this conversation even more timely.
Jitania, Arjun, what are the biggest public and private investment opportunities in India that you'd highlight.
Jitania Kandhari: I'd say in public equities there are five broad thematic opportunities in India. Financialization of savings and structurally lower credit costs; consumption with an aspirational consumer and a growing middle-class; localization and supply chain benefits as a China +1 destination; digitization with …
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Why the ‘Rolling Recovery’ Has Already Begun
22 september 2025 · 12 min
Our CIO Mike Wilson joins U.S. Equity strategist Andrew Pauker to answer frequently asked questions about their latest economic outlook, including how U.S. equities are transitioning to a new bull market. 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 we're going to try something a little different. I have my colleague, Andrew Pauker from the U.S. Equity Strategy Team here to discuss some of the client questions and feedback to our views.
It's Monday, September 22nd at 11:30am in New York.
So, let's get after it.
Andrew, we constantly deal with client questions on our views. More recently, the questions have been focused on our view that we've transitioned from a rolling recession to a rolling recovery in a new bull market. Secondarily, it's about the tension between the equity market's need for speed and how fast the Fed will actually cut rates. Finally, why is accelerating inflation potentially good for equities?
Where do you want to start?
Andrew Pauker: Mike, in my conversations with clients, the main debate seems to be around whether the labor cycle and earnings recession are behind us or in front of us. Walk us through our take here and why we think the rolling recession ended with Liberation Day and that we're now transitioning to an early cycle backdrop.
Mike Wilson: So, just to kind of level set, you know, we've had this view that – and starting in 2022 with the payback and the COVID demand. And from the pull forward – that began, what we call, a rolling recession. It started with the technology sector and consumer goods, where the demand was most extreme during the lockdowns.
And then of course we've had recessions in housing, manufacturing, and other areas in commodities. Transportation. It's been very anemic growth, if any growth at all, as the economy has been sort of languishing. And what's been stron…
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Can the Fed’s Move Boost Global Credit?
19 september 2025 · 4 min
With this week’s announcement of a rate cut and further cuts in the offing, the Fed seems willing to let the U.S. economy run a little hot. Our Head of Corporate Credit Andrew Sheets explains why this could give an unexpected boost to the European bond market. Lees meer
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----- Transcript -----
Andrew Sheets: Welcome to Thoughts on the Market. I'm Andrew Sheets, Head of Corporate Credit Research at Morgan Stanley.
Today – a Fed that looks willing to let the economy run hot, and why this could help the case for credit overseas.
It's Friday, September 19th at 2pm in London.
Earlier this week, the Federal Reserve lowered its target rate by a quarter of a percent, and signaled more cuts are on the way. Yet as my colleagues Michael Gapen and Matt Hornbach discussed on this program yesterday, this story is far from straightforward. The Fed is lowering interest rates to support the economy despite currently low unemployment and elevated inflation.
The justification for this in the Fed's view is a risk that the job market may be set to weaken going forward. And so, it's better to err on the side of providing more support now; even if that support raises the chances that inflation could stay somewhat higher for somewhat longer. Indeed, the Fed's own economic projections bear out this willingness to err on the side of letting the economy run a bit hot. Relative to where they were previously, the Fed's latest assessment sees future economic growth higher, inflation higher, and unemployment lower. And yet, in spite of all this, they also see themselves lowering interest rates faster.
If the labor market is really set to weaken – and soon – the Fed's shift to provide more near-term support is going to be more than justified. But if growth holds up, well, just think of the backdrop. At present, we have bank loan growth accelerating, inflation that's elevated, government borrowing that's large, stock valuations near 30-year highs, and credit sp…
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Weighing Fed Cut Against Jobs and Inflation Risks
18 september 2025 · 11 min
On Wednesday, the Fed announced its first rate cut in nine months. While the reduction was widely expected, our Global Head of Macro Strategy Matthew Hornbach and Chief U.S. Economist Michael Gapen explain the data that markets and the Fed are watching. Lees meer
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----- Transcript -----
Matthew Hornbach: Welcome to Thoughts on the Market. I'm Matthew Hornbach, Global Head of Macro Strategy.
Michael Gapen: And I'm Michael Gapen, Morgan Stanley's Chief U.S. Economist.
Matthew Hornbach: Our topic today is the Fed's first quarter percent rate cut in 2025. We're here to discuss the implications and the path forward.
It's Thursday, September 18th at 10am in New York.
So, Mike, the Fed concluded its meeting on Wednesday. What was the high-level takeaway from your perspective?
Michael Gapen: So, I think there's two main points here. There's certainly more that we can discuss, but two main takeaways for me are obviously the Fed is moving because it sees downside risk in the labor market.
So, the August employment data revealed that the hiring rate took a large step down and stayed down, right. And the Fed is saying – it's a curious balance in the labor market. We're not quite sure how to assess it, but when employment growth slows this much, we think we need to take notice.
So, they're adjusting their view. We'll call it risk management 'cause that's what Powell said. And saying there's more risk of worse outcomes in the labor market, keeping a restricted policy stance is inappropriate, we should cut. So that's part one. I think he previewed all of that in Jackson Hole. So, it was largely the same, but it's important to know why the Fed's cutting.
The second thing that was interesting to me is as much as he, Powell in this case, tried to avoid the idea that we're on a preset path. That, you know, policy is always data dependent and it's always the meeting-to-meeting decision – we know that. But it does feel like if you're recalibratin…
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Special Encore: AI Takes the Wheel
18 september 2025 · 12 min
Original Release Date: August 21, 2025 Lees meer
From China’s rapid electric vehicle adoption to the rise of robotaxis, humanoids, and flying vehicles, our analysts Adam Jonas and Tim Hsiao discuss how AI is revolutionizing the global auto industry.
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Adam Jonas: Welcome to Thoughts on the Market. I'm Adam Jonas. I lead Morgan Stanley's Research Department's efforts on embodied AI and humanoid robots.
Tim Hsiao: And I'm Tim Hsiao, Greater China Auto Analyst.
Adam Jonas: Today – how the global auto industry is evolving from horsepower to brainpower with the help of AI.
It's Thursday, August 21st at 9am in New York.
Tim Hsiao: And 9pm in Hong Kong.
Adam Jonas: From Detroit to Stuttgart to Shanghai, automakers are making big investments in AI. In fact, AI is the engine behind what we think will be a $200 billion self-driving vehicle market by 2030. Tim, you believe that nearly 30 percent of vehicles sold globally by 2030 will be equipped with Level 2+ smart driving features that can control steering, acceleration, braking, and even some hands-off driving. We expect China to account for 60 percent of these vehicles by 2030.
What's driving this rapid adoption in China and how does it compare to the rest of the world?
Tim Hsiao: China has the largest EV market globally, and the country’s EV sales are not only making up over 50 percent of the new car sales locally in China but also accounting for over 50 percent of the global EV sales. As a result, the market is experiencing intense competition. And the car makers are keen to differentiate with the technological innovation, to which smart driving serve[s] as the most effective means. This together with the AI breakthrough enables China to aggressively roll out Level 2+ urban navigation on autopilot. In the meantime, Chinese government support, and cost competitive supply chains also helps.
So, we are looking for China's the adoption of Level 2+ smart driving o…
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How U.S. Industry Is Reinventing Itself
17 september 2025 · 14 min
Our strategists Michelle Weaver and Adam Jonas join analyst Christopher Snyder to discuss the most important themes that emerged from the Morgan Stanley Annual Industrials Conference in Laguna Beach. Lees meer
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Michelle Weaver: Welcome to Thoughts on the Market. I'm Michelle Weaver, Morgan Stanley's U.S. Thematic Strategist.
Christopher Snyder: I'm Chris Snyder, Morgan Stanley's U.S. Multi-Industry Analyst.
Adam Jonas: And I'm Adam Jonas, Morgan Stanley's Embodied AI Strategist.
Michelle Weaver: We recently concluded Morgan Stanley's annual industrials conference in Laguna Beach, California, and wanted to share some of the biggest takeaways.
It's Tuesday, September 16th at 10am in New York.
I want to set the stage for our conversation. The overall tone at the conference was fairly similar to last year with many companies waiting for a broader pickup. And I'd flag three different themes that really emerged from the conference.
So first, AI. AI is incredibly important. It appeared in the vast majority of fireside conversations. And companies were talking about AI from both the adopter and the enabler angle.
Second theme on the macro, overall companies remain in search of a reacceleration. They pointed to consistently expansionary PMIs or a PMI above 50, a more favorable interest rate environment and greater clarity on tariffs as the key macro conditions for renewed momentum.
And then the last thing that came up repeatedly was how are companies going to react to tariffs? And I would say companies overall were fairly constructive on their ability to mitigate the margin impact of tariffs with many talking about both leveraging pricing power and supply chain shifts to offset those impacts.
So, Chris, considering all this, the wait for an inflection came up across a number of companies. What were some of your key takeaways on multis, on the macro front?
Christopher Snyder: The commentary was stable to modest…
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Can Fed Cuts Bring Mortgage Rates Down?
15 september 2025 · 7 min
For investors looking to make sense of housing-related assets amidst changes in Fed policy stance, our co-heads of Securitized Product Research Jay Bacow and James Egan offer their perspective on mortgage rates and the market. Lees meer
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----- Transcript -----
James Egan: Welcome to Thoughts on the Market. I'm Jim Egan, co-head of Securitized Products Research at Morgan Stanley.
Jay Bacow: I'm Jay Bacow, the other co-head of Securitized Products Research at Morgan Stanley.
Today we're talking about the Fed, mortgage rates and the implications to the housing market.
It's Monday, September 15th at 11:30am in New York.
Now Jim, the Fed is meeting on Wednesday, and both our economists and the market are expecting them to cut rates in this meeting – and continue to cut rates at least probably two more times in 2025, and multiple times in 2026. We've talked a lot about the challenges and the affordability in the U.S. homeowners’ market, in the U.S. mortgage market.
Before we get into what this could help [with] the affordability challenges, how bad is that affordability right now?
James Egan: Sure. And as we've discussed on this podcast in the past, one of the biggest issues with the affordability challenges in the U.S. housing market specifically is how it's fed through to supply issues as the lock-in effect has kept homeowners with low 30-year mortgage rates from listing their homes.
But just how locked in does the market remain today? The effective rate on the outstanding mortgage market, kind of the average of the mortgages outstanding, is below 4.25 percent. The prevailing rate for 30-year mortgages today is still over 6.25 percent, so we're talking about two full percentage points, 200 basis points outta the money.
Jay Bacow: And that seems like a lot. Has it been that way in the past?
James Egan: If we look at roughly 40 years of data ending in 2022, the market was only 100 basis points outta the money for eight individual …
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How Cybersecurity Is Reshaping Portfolios
12 september 2025 · 4 min
Online crime is accelerating, making cybersecurity a fast-growing and resilient investment opportunity. Our Cybersecurity and Network and Equipment analyst Meta Marshall discusses the key trends driving this market shift. Lees meer
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Welcome to Thoughts on the Market. I’m Meta Marshall, Morgan Stanley’s Cybersecurity and Network and Equipment Analyst. Today – the future of digital defense against cybercrime.
It’s Friday, September 12th, at 10am in New York.
Imagine waking up to find your bank account drained, your business operations frozen, or your personal data exposed – all because of a cyberattack. Today, cybersecurity isn't an esoteric tech issue. It impacts all of us, both as consumers and investors.
As the digital landscape grows increasingly complex, the scale and severity of cybercrime expand in tandem. This means that even as companies spend more, the risks are multiplying even faster. For investors, this is both a warning and an opportunity.
Cybersecurity is now a $270 billion market. And we expect it to grow at 12 percent per year through 2028. That's one of the fastest growth rates across software.
And here's another number worth noting: Chief Information Officers we surveyed expect cybersecurity spending to grow 50 percent faster than software spending as a whole. This makes cybersecurity the most defensive area of IT budgets—meaning it’s least likely to be cut, even in tough times.
This hasn’t been lost on investors. Security software has outperformed the broader market, and over the past three years, security stocks have delivered a 58 percent return, compared to just 22 percent for software overall and 79 percent for the NASDAQ. We expect this outperformance against software to continue as AI expands the number of ways hackers can get in and the ways those threats are evolving.
Looking ahead, we see a handful of interconnected mega themes driving investment opportunities in cybersecurity.…
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What’s Next for the India-China Trade?
11 september 2025 · 4 min
Our Chief Asia Economist Chetan Ahya discusses how the evolving trade relationship between India and China could redefine global supply chains and unlock new investment opportunities. Lees meer
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Welcome to Thoughts on the Market. I’m Chetan Ahya, Morgan Stanley’s Chief Asia Economist.
Today – one of the most important economic relationships of our time: India and China. And what the future may hold.
It’s Thursday, September 11th at 2 pm in Hong Kong.
Trade dynamics between India and China are evolving rapidly. They are not just shaping their own futures. They are influencing global supply chains and investment flows.
India’s trade with China has nearly doubled in the last decade. India’s bilateral trade deficit with China is its largest—currently at U.S. $120 billion. On the flip side, China’s trade surplus with India is the biggest among all Asian economies.
We expect this trade relationship to deepen given economic imperatives. India needs support on tech know-how, capital goods and critical inputs; and China needs to capitalize on growth opportunities in the second largest and fastest growing EM. Let’s explore these issues in turn.
India needs to integrate itself into the global value chain. And to do that, India needs Foreign Direct Investment from China, much like how China’s rise was fueled by Foreign Direct Investment from the U.S., Europe, Japan, and Korea, which brought the technology and expertise. For India, easing restrictions on Chinese FDI could be a game-changer, enabling the transfer of tech know-how and boosting manufacturing competitiveness.
Now, China is the world’s manufacturing powerhouse. It accounts for more than 40 percent of the global value chain—far ahead of the U.S. at 13 percent and India at just 4 percent. The global goods trade is increasingly focused on products higher up the value chain—think semiconductors, EVs, EV batteries, and solar panels. And China is the top global…
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Why Gold Still Holds Glitter in Markets
11 september 2025 · 4 min
Our Metals & Mining Commodity Strategist Amy Gower discusses her bullish outlook for gold and what the metal’s rally in 2025 says about inflation, central banks, and global risk. Lees meer
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Welcome to Thoughts on the Market. I’m Amy Gower, Morgan Stanley’s Metals & Mining Commodity Strategist.
Today, we’re talking about gold, a metal that’s more than just a safe haven for investors, and what it tells us about the global economy and markets right now.
It’s Wednesday, September 10th, at 3pm in London.
Gold has always been the go-to asset in times of uncertainty. But in 2025, its role is evolving. Investors are watching gold not just as a hedge against inflation, but as a barometer for everything from central bank policy to geopolitical risk. When gold prices move, it’s often a sign that something big is happening beneath the surface.
Gold and silver have both already clocked up hefty year-to-date gains of 39 and 42 percent respectively. So, what’s been driving this rally?
Well, several factors stand out. For one, central banks are on track for another year of strong buying, with gold now representing a bigger share of central bank reserves than treasuries for the first time since 1996. This is a strong vote of confidence in gold’s long-term value. Also, gold-backed Exchange-Traded Funds, or ETFs, saw inflows of $5 billion in August alone, with the year-to-date inflows the highest on record outside of 2020, signaling renewed interest from institutional investors too. With inflation still above target in many major economies, gold’s appeal has been surprisingly resilient despite being a non-yielding asset. And investors are betting that central banks may soon have to cut rates, which could further boost gold prices.
In fact, from here we see around 5 percent further upside to gold by year end to $3800/oz which would be a new all-time high.
But there is one important wrinkle to consider. Keep in mind that whi…
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Can AI Make Healthcare Less Expensive?
9 september 2025 · 8 min
Many Americans struggle with the rising cost of healthcare. Analysts Terence Flynn and Erin Wright explain how AI might bend the cost curve, from Morgan Stanley’s 23rd annual Global Healthcare Conference in New York. Lees meer
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Terence Flynn: Welcome to Thoughts on the Market. I'm Terence Flynn, Morgan Stanley's U.S. Biopharma Analyst.
Erin Wright: And I'm Erin Wright, U.S. Healthcare Services Analyst.
Terence Flynn: Thanks for joining us. We're actually in the midst of the second day of Morgan Stanley's annual Global Healthcare Conference, where we hosted over 400 companies. And there are a number of important themes that we discussed, including healthcare policy and capital allocation.
Now, today on the show, we're going to discuss one of these themes, healthcare spending, which is one of the most pressing challenges facing the U.S. economy today.
It is Tuesday, September 9th at 8am in New York.
Imagine getting a bill for a routine doctor's visit and seeing a number that makes you do a double take. Maybe it's $300 for a quick checkup or thousands of dollars for a simple procedure.
For many Americans, those moments of sticker shock aren't rare. They are the reality.
Now with healthcare costs in the U.S. higher than many other peer countries on a percentage of GDP basis, it's no wonder that everyone – not just investors – is asking; not just, ‘Why is this happening?’ But ‘How can we fix it?’ And that's why we're talking about AI today. Could it be the breakthrough needed to help rein in those costs and reshape how care is delivered?
Now I'm going to go over to you, Erin. Why is U.S. healthcare spending growing so rapidly compared to peer countries?
Erin Wright: Clearly, the aging population in the U.S. and rising chronic disease burden here are clearly driving up demand for healthcare. We're seeing escalating demand across the senior population, for instance. It's coinciding with greater utilization of…
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A New Bull Market Begins?
8 september 2025 · 5 min
Morgan Stanley’s CIO and Chief U.S. Equity Strategist Mike Wilson discusses the outlook for U.S. stocks after Friday's nonfarm payroll data reinforced the thesis of a transition from a rolling recession to a rolling recovery. 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 Friday’s Payroll report and what it means for equities.
It's Monday, Sept 8th at 11:30am in New York. So let’s get after it.
The heavily anticipated nonfarm payroll report on Friday supports our view that the labor market is weak. However, this is old news to the equity market as we have been discussing for months. First, the labor market data is perhaps the most backward-looking of all the economic series. Second, it’s particularly prone to major revisions that tend to make the current data unreliable in real time, which is why the National Bureau of Economic Research typically declares a recession started at a time when most were unaware we were in one.
Furthermore, history suggests these revisions are pro-cyclical, meaning they get more negative going into a recession and then more positive once the recovery’s begun. It appears this time is no different. Indeed, Friday’s revisions were better than last month’s by a wide margin suggesting the labor market bottomed in the second quarter.
This insight adds support to our primary thesis on the economy and markets that I have been maintaining for the past several years. More specifically, I believe a rolling recession began in 2022 and finally bottomed in April with the tariff announcements made on “Liberation Day.” After the initial phase of this rolling recession, that was led by a payback in Covid pull-forward demand in tech and consumer goods, other sectors of the economy went through their own individual recessions at different times.
This is a key reason why we never saw the …
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Why the U.S. Dollar Still Smiles
5 september 2025 · 6 min
Our G10 FX Market Strategist Andrew Watrous challenges the prevailing market view on the U.S. dollar, reaffirming the relevance of Morgan Stanley’s "dollar smile" framework. Lees meer
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Welcome to Thoughts on the Market. I’m Andrew Watrous, G10 FX Strategist at Morgan Stanley. Today – a look at how the US dollar behaves under different global growth circumstances. And why – contrary to the views of some observers – we think the dollar still smiles.
It’s Friday, September 5, at 10 AM in New York.
We've been talking a good amount on this show about the US dollar – not just as a currency, but as the cornerstone of the global financial system. As the world’s reserve currency, its movements ripple across markets everywhere. The trajectory of the dollar affects everything from your portfolio’s performance to the cost of your next international vacation.
Let’s start with the “dollar smile,” which is a framework Morgan Stanley FX strategists developed back in 2001, to explain how the dollar behaves under different global growth scenarios.
Picture a smile-shaped curve: On the lefthand side, the dollar rises, goes up, when global growth is concerningly weak as nervous investors flock to US assets as a safe haven. On the right side of the smile, when US growth outperforms growth in the rest of the world, capital flows into the US, boosting the dollar. In the middle of the curve – which is the bottom of the smile – the dollar weakens, goes down, when growth is robust around the world and synchronized globally. In that environment - middle of the smile - investors seek riskier assets which weighs on the dollar - in part because they could borrow in dollars and invest outside the US.
It’s kind of a simple framework, right? But here’s the twist: some investors argue that the left side of the smile might be broken. In other words, they say that the dollar no longer rises if people are really worried about global growth.
T…
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Walking a Narrow Economic Path
4 september 2025 · 4 min
Our Head of Corporate Credit Research Andrew Sheets discusses the scenarios markets may face in September and for the rest of the year, as the Federal Reserve weighs interest rate cuts amidst slowing job growth and persistent inflation. Lees meer
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Welcome to Thoughts on the Market. I'm Andrew Sheets, head of Corporate Credit Research at Morgan Stanley.
Today, the narrow economic path the markets face as we come back from summer.
It's Thursday, September 4th at 2:00 PM in London.
September is a month of change and one of my favorite times of the year. The weather gets just a little crisper. Kids go back to school. Football, both kinds, are back on tv. And financial markets return from the summer in earnest, quickly ramping back up to full speed. This year, September brings a number of robust debates that we'll be covering on this podcast, but chief among these might be exactly how strong or not investors actually want the economy to be.
You see, at the moment, the Federal Reserve is set to lower interest rates, and they're set to do that even though inflation in the US is still well above target and it's moving higher. That's unusual and it's made even more unusual in the context of financial conditions being very easy and the US government borrowing a historically large amount of money.
The Fed's reason to lower interest rates despite strong markets, elevated inflation and high budget deficits, is the concern that the US labor market is weakening. And this fear is not unfounded. US job growth has recently slowed sharply. In 2023 and 2024, the US was adding on average about 200,000 jobs every month. But this year job growth has been less than half that amount, just 85,000 per month. And the most recent data's even worse. Tomorrow brings another important update. But here's the rub: the Fed, in theory, is lowering rates because the labor market is weaker. Markets would like those lower rates, but investors w…
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Why a Fed Pivot Could Trigger Volatility
3 september 2025 · 3 min
Fed Chair Jay Powell’s speech at Jackson Hole underscored the central bank’s new focus on managing downside growth risks. Michael Zezas, our Global Head of Fixed Income Research and Public Policy Strategy, talks about how that shift could impact markets heading into 2026. Lees meer
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Welcome to Thoughts on the Market. I'm Michael Zezas, Global Head of Fixed Income Research and Public Policy Strategy.
Today: What a subtle shift in the Fed’s reaction function could mean for markets into year-end.
It’s Wednesday, September 3rd at 11am in New York.
Last week, our U.S. economics team flagged a subtle but important shift in U.S. monetary policy. Chair Jay Powell’s speech at Jackson Hole underscored that the Fed looks more focused on managing downside growth risks and, consequently, a bit more tolerant on inflation.
As you heard Michael Gapen and Matthew Hornbach discuss last week – our colleagues expect this brings forward another Fed cut into September, kicking off a quarterly pace of 25 basis-point moves. But while this is a meaningful change in the timing of Fed rate cuts, this path would only result in slightly lower policy rates than those implied by the futures market, a proxy for the consensus of investors.
So what does it mean for our views across asset classes? In short, our central case is for mostly positive returns across fixed income and equities into year-end. But the Fed’s increased tolerance for inflation is a new wrinkle that means investors are likely to experience more volatility along the way.
Consider U.S. government bonds. A slower economy and falling policy rates argue for lower Treasury yields. But if investors grow more convinced that the Fed will tolerate firmer inflation, the curve could steepen further, with the risk of longer maturity yields falling less, or potentially even rising.
Or consider corporate bonds. Our economic growth view is “slower but still expanding,” which generall…
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Are Agency Mortgage-Backed Securities Making a Comeback?
2 september 2025 · 5 min
Our Co-Heads of Securitized Products Research Jay Bacow and James Egan explain why the macro backdrop could be changing in favor of agency mortgages after the Fed’s annual meeting in Jackson Hole. Lees meer
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Jay Bacow: 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 why mortgages offer value after Jackson Hole.
It's Tuesday, September 2nd at 2pm in New York.
James Egan: So, Jay, let's start with the big picture after Jackson Hole, the Fed seems like it's leaning towards cutting rates in a steady, almost programmatic fashion. And in prior episodes of Thoughts on the Market, you've heard different strategists at Morgan Stanley talk about the potential implications there.
But for mortgages, what does this mean?
Jay Bacow: Well, it takes a lot of the uncertainty out of the market, and that's a big deal. One of the worst-case scenario[s] for agency mortgages – that the investors are buying not mortgages that homeowners have – would've been the Fed staying on hold for much longer than expected. With that risk receding, the backdrop for investors owning agency mortgages feels a lot more supportive. And when we look at high quality assets, we think mortgages look like the cheapest option.
Jim, you mentioned some of the previous strategists that come on Thoughts on the Market. Our Global Head of Corporate Credit Strategy, Andrew Sheets had highlighted recently how credit spreads are trading at basically the tights of the past 20 years. Mortgages are basically at the average level of the past 20 years. It seems attractive to us.
James Egan: And that relative value really does matter. Investors are looking for places to earn yield without taking on too much credit risk. Mortgages, particularly agency mortgages wit…
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Market Outcomes of Fed’s New Course
29 augustus 2025 · 10 min
In the second of a two-part episode, our Chief U.S. Economist Michael Gapen and Global Head of Macro Strategy Matthew Hornbach talk about how Treasury yields and the U.S. dollar could react to the possible Fed rate path. Lees meer
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Matthew Hornbach: Welcome to Thoughts on the Market. I'm Matthew Hornbach, Global Head of Macro Strategy.
Michael Gapen: And I'm Michael Gapen Morgan Stanley's Chief U.S. Economist.
Yesterday we talked about Michael's reaction to the Jackson Hole meeting last week, and our assessment of the Fed's potential policy pivot. Today my reaction to the price action that followed Chair Powell's speech and what it means for our outlook for the interest rate markets and the U.S. dollar.
It's Friday, August 29th at 10am in New York,
Michael Gapen: Okay, Matt. Yesterday you were in the driver's seat asking me questions about how Chair Powell's comments at Jackson Hole influenced our views around the outlook for monetary policy. I'd like to turn it back to you, if I may. What did you make of the price action that followed the meeting?
Matthew Hornbach: Well, I think it's safe to say that a lot of investors were surprised just as you were by what Chair Powell delivered in his opening remarks. We saw a fairly dramatic decline in short-term interest rates, taking the two-year Treasury yield down quite a bit. And at the same time, we also saw the yield curve steepen, which means that the two-year yield fell much more than the 10-year yield and the 30-year bond yield fell. And I think what investors were thinking with this surprise in mind is just what you mentioned earlier – that perhaps this is a Fed that does have slightly more tolerance for above target inflation.
And so, you can imagine a world in which, if the Fed does in fact cut rates, as you're forecasting, or more aggressively than you're forecasting, amidst an environment where inflation continues to run above target. Then you could se…
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Breaking Down the Fed’s New Course
28 augustus 2025 · 9 min
In the first of a two- part episode, our Chief U.S. Economist Michael Gapen and Global Head of Macro Strategy Matthew Hornbach discuss the outcome of the Jackson Hole meeting and the outlook for the U.S. economy and the Fed rate path during the rest of the year. Lees meer
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Matthew Hornbach: Welcome to Thoughts on the Market. I'm Matthew Hornbach, Global Head of Macro Strategy.
Michael Gapen: And I'm Michael Gapen, Morgan Stanley's Chief U.S. Economist.
Matthew Hornbach: Last Friday, the Jackson Hole meeting delivered a big surprise to markets. Both stocks and bonds reacted decisively.
Today, the first of a two-part episode. We'll discuss Michael's reaction to Chair Powell's Jackson Hole comments and what they mean for his view on the outlook for monetary policy. Tomorrow, the outlook for interest rate markets and the US dollar.
It's Thursday, August 28th at 10am in New York.
So, Mike, here we are after Jackson Hole. The mood this year felt a lot more hawkish, or at least patient than what we saw last week. And Chair Powell really caught my attention when he said, “with policy and restrictive territory, the baseline outlook for the shifting balance of risks may warrant adjusting our policy stance.” That line has been on my mind ever since.
So, let's dig into it. What's your gut reaction?
Michael Gapen: Yeah, Matt, it was a surprise to me, and I think I would highlight three aspects of his Jackson Hole comments that were important to me.
So, I think what happened here, of course, is the Fed became much more worried about downside risk to the labor market after the July employment report, right? So, at the July FOMC meeting, which came before that report, Powell had said, ‘Well, you know, slow payroll growth is fine as long as the unemployment rate stays low.’ And that's very much in line with our view. But sometimes these things are easier said than done. And I think the July employment report told them p…
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Could a Fed Rate Cut Affect Credit Quality?
27 augustus 2025 · 4 min
Our Head of Corporate Credit Research Andrew Sheets discusses why a potential start of monetary easing by the Federal Reserve might be a cause for concern for credit markets. Lees meer
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Andrew Sheets: Welcome to Thoughts on the Market. I'm Andrew Sheets, Head of Corporate Credit Research at Morgan Stanley. Today – could interest rate cuts by the Fed unleash more corporate aggressiveness?
It's Wednesday, August 27th at 2pm in London.
Last week, the Fed chair, Jerome Powell hinted strongly that the Central Bank was set to cut interest rates at next month's meeting. While this outcome was the market's expectation, it was by no means a given.
The Fed is tasked with keeping unemployment and inflation low. The US unemployment rate is low, but inflation is not only above the Fed's target, it's recently been trending in the wrong direction. And to bring inflation down the Fed would typically raise interest rates, not lower them.
But that is not what the Fed appears likely to do; based importantly on a belief that these inflationary pressures are more temporary, while the job market may soon weaken. It is a tricky, unusual position for the Fed to be in, made even more unusual by what is going on around them.
You see, the Fed tries to keep the economy in balance; neither too hot or too cold. And in this regard, its interest rate acts a bit like taps on a faucet. But there are other things besides this rate that also affect the temperature of the economic water. How easy is it to borrow money? Is the currency stronger or weaker? Are energy prices high or low? Is the equity market rising or falling? Collectively these measures are often referred to as financial conditions.
And so, while it is unusual for the Federal Reserve to be lowering interest rates while inflation is above its target and moving higher, it's probably even more unusual for them to do so while these other governors of economic activity, these finan…
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Gen Z Trends That Could Disrupt Markets
26 augustus 2025 · 13 min
Our analysts Adam Jonas and Alex Straton discuss how tech-savvy young professionals are influencing retail, brand loyalty, mobility trends, and the broader technology landscape through their evolving consumer choices. Lees meer
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Adam Jonas: Welcome to Thoughts on the Market. I'm Adam Jonas, Morgan Stanley's Embodied AI and Humanoid Robotics Analyst.
Alex Straton: And I'm Alex Straton, Morgan Stanley's U.S. Softlines Retail and Brands Analyst.
Adam Jonas: Today we're unpacking our annual summer intern survey, a snapshot of how emerging professionals view fashion retail, brands, and mobility – amid all the AI advances.
It is Tuesday, August 26th at 9am in New York.
They may not manage billions of dollars yet, but Morgan Stanley's summer interns certainly shape sentiment on the street, including Wall Street. From sock heights to sneaker trends, Gen Z has thoughts. So, for the seventh year, we ran a survey of our summer interns in the U.S. and Europe. The survey involved more than 500 interns based in the U.S., and about 150 based in Europe.
So, Alex, let’s start with what these interns think about fashion and athletic footwear. What was your biggest takeaway from the intern survey?
Alex Straton: So, across the three categories we track in the survey – that's apparel, athletic footwear, and handbags – there was one clear theme, and that's market fragmentation.
So, for each category specifically, we observed share of the top three to five brands falling over time. And what that means is these once dominant brands, as consumer mind share is falling – and it likely makes them lower growth margin and multiple businesses over time. At the same time, you have smaller brands being able to captivate consumer attention more effectively, and they have staying power in a way that they haven't necessarily historically. I think one other piece I would just add; the rise of e-commerce and social media against a low barrie…
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How Stocks Could React to a Fed Pivot
25 augustus 2025 · 4 min
Opinions by market pundits have been flying since Fed Chair Powell’s remarks at Jackson Hole last week, leaving the door open for interest rate cuts as soon as in September. Our CIO and Chief U.S. Equity Strategist Mike Wilson explains his continued call for a bullish outlook on U.S. stocks. 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. Today on the podcast I’ll be discussing the Fed’s new signaling on policy and what it means for stocks.
It's Monday, August 25th at 11:30am in New York.
So, let’s get after it.
Over the past few months, the markets started to anticipate a Fed pivot to a more dovish stance this fall. More specifically, the bond market started to price in a very high likelihood for the Fed to start cutting interest rates again in September. Equities have taken their cues from this signaling in the bond market by trading higher through most of the summer – despite lingering concerns about tariffs, international conflicts and valuation. I have remained bullish throughout this period given our focus on historically strong earnings revisions and the view that the Fed’s next move would be to cut rates even if the timing remained uncertain.
Last week, the Fed held its annual symposium in Jackson Hole where they typically discuss near term policy intentions as well as larger considerations for their strategic policy framework. We learned two key things.
First, the Fed seems closer to cutting rates in September than the last time Chair Powell spoke publicly. This change also comes after a week in which the markets were left wondering if he would remain more hawkish until inflation data confirmed what markets have already figured out. Clearly, Powell leaned more dovish. And with markets a bit nervous going into his speech on Friday morning, equities rallied sharply the rest of the day.
Second, the Fed also indicated that it will …
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What to Watch When Credit Spreads Narrow
22 augustus 2025 · 4 min
Credit spreads are at the lowest levels in more than two decades, indicating health of the corporate sector. However, our Head of Corporate Credit Research Andrew Sheets highlights two forces investors should monitor moving forward. Lees meer
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----- Transcript -----
Andrew Sheets: Welcome to Thoughts on the Market. I'm Andrew Sheets, Head of Corporate Credit Research at Morgan Stanley.
Today – what to make of credit spreads as they hit some of their lowest levels in over 20 years? And what could change that?
It's Friday, August 22nd at 2pm in London.
The credit spread is the difference between the higher yield an investor gets for lending to a company relative to the government. This difference in yield is a reflection of perceived differences in risk. And bond investors spend a lot of time thinking, debating, and trading what they think it should be.
It increases as the rating of a company falls and usually increases for bonds with longer maturities relative to shorter ones. The reason one invests in credit is to hopefully pick up some extra yield relative to buying a government bond and do so without taking too much additional risk.
The challenge today is that these spreads are very low – or tight, in market parlance. In the U.S. corporate bonds with Investment Grade ratings only pay about three-quarters of a percent more than U.S. government bonds of the same maturity. It's a similar difference between the yield on companies in Europe and the yield on German debt, the safest benchmark in Europe.
And so, in the U.S. these are the lowest spread levels since 1998, and in Europe, they're the lowest levels since 2007. The relevant question would seem to be, well, what changes this?
One way of thinking about valuations in investing – and spreads are certainly a measure of valuation – is whether levels are so extreme that there's not really any precedent for them being sustained for an extended period of time. But for credit, this…