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AI Takes the Wheel
21 augustus 2025 · 12 min
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. Lees meer
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----- Transcript -----
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 on passenger vehicle to reach 25 percent …
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The Fed’s Next Moves After Mixed Data
20 augustus 2025 · 5 min
Markets have already priced in a Fed cut, given the mixed economic data in the July labor and CPI prints. Our Global Economist Arunima Sinha makes the case for why we’re standing by our baseline call for a higher bar for a rate cut. Lees meer
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----- Transcript -----
Arunima Sinha: Welcome to Thoughts on the Market. I'm Arunima Sinha, Global Economist at Morgan Stanley.
Today – our evaluation of the Fed's policy path following the July CPI print, and the broader implications for other central banks.
It's Wednesday, August 20th at 2pm in New York.
Our baseline call has been that the Fed will remain on hold this year, and last week’s CPI print has not changed that view. As we have noted, average tariff rates are still ramping up given the implementation delays, and so their cumulative effect on prices could be more lagged. Within the CPI print, tariff exposed goods other than apparel and autos continued to be firm. The surprise came in services inflation, which showed a reversal led by the uptick in airfares and hotel prices, which had been running in deflationary territory for much of this year.
Some of the pushback against our view on inflation stepping up over the summer due to tariffs was that services disinflation could compensate. But as this print showed, that is unlikely to be the case. While we expect services inflation to continue to moderate, we think that services disinflation in the first half of [20]25 was exaggerated by weakness and volatile competence; and both core CPI and core PCE inflation are still at their pace from last year.
So further acceleration in goods inflation from tariff effects over the summer would still see inflation remaining well above the Fed's target. After the July U.S. employment and CPI reports, the bar for the Fed to stay on hold in September is clearly higher.
So, what are the risks to our call?
The road goes back to how the data and the Fed's reaction function will evolve over ahead of …
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Why Credit Is Core to AI Expansion
19 augustus 2025 · 7 min
Our Chief Fixed Income Strategist Vishy Tirupattur brings in Vishwas Patkar, Head of U.S. Credit Strategy, and Carolyn Campbell, Head of Consumer and Commercial ABS Research, to explain our high conviction on the role of credit markets in data center financing. 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.
Vishwas Patkar: I'm Vishwas Patkar, Head of U.S. Credit Strategy.
Carolyn Campbell: And I'm Carolyn Campbell, Head of Consumer and Commercial ABS Research.
Vishy Tirupattur: Today we'll talk about the feedback – and pushback – we've received on the data center financing note we wrote a few weeks ago.
It's Tuesday, August 19th at 10am In New York.
In the week since we published a report on bridging the data center financing gap, we were met with a wide range of investors to discuss the key takeaways from our report.
We projected that meeting the data center demand requires something like $3 trillion of capital expenditure by 2028. And we projected that about half of this funding will come from hyperscaler cash flows, but the rest financed through different channels of the credit markets.
So, Vishwas, some of the skeptics invoke comparisons to prior CapEx cycles, particularly the late 1990s telecom boom that did not quite end well. How would you respond to that skepticism?
Vishwas Patkar: The 1990s telecom CapEx cycle certainly came up in a lot of our meetings. It was the last time we arguably saw CapEx cycle of this magnitude. I think the counter to this is that there are some very important differences versus what we saw then versus what we expect. Most importantly, the CapEx cycle back then was largely financed on corporate balance sheets, and we saw pretty significant uptake in debt issuance and leverage.
Also, through the 1990s, the names, the companies that were spending were mid- to low-credit quality and no…
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What’s Fueling the Future of Energy in Asia?
18 augustus 2025 · 11 min
Our analysts Tim Chan and Mayank Maheshwari discuss how nuclear power and natural gas are reshaping Asia’s evolving energy mix, and what these trends mean for sustainability and the future of energy. Lees meer
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----- Transcript -----
Tim Chan: Welcome to Thoughts on the Market. I'm Tim Chan, Morgan Stanley's Head of Asia Sustainability Research.
Mayank Maheshwari: And I am Mayank Maheshwari, the Energy Analyst for India and Southeast Asia.
Tim Chan: Today – a major shift in global energy. We are talking about nuclear power, gas adoption, and what the future holds.
It's Monday, August 18th at 8am in Hong Kong.
Mayank Maheshwari: And it's 8am in Singapore.
Tim Chan: Nuclear power is no longer niche; it’s a megatrend. It was once seen as controversial and capital intensive. But now nuclear power is stepping into the spotlight—not just for decarbonization, but for energy security.
Global investment projections in this sector are now topping more than $2 trillion by 2050. This is fueled by a growing appetite from major tech companies for clean, reliable 24/7 energy. More specifically, Asia is emerging as the epicenter of capacity growth, and that’s where your coverage comes in, Mayank.
With the rising consumption of electricity, how does nuclear energy adoption stack up in your universe?
Mayank Maheshwari: Tim, it's a fascinating world on power right now that we are seeing. Now the tight global power markets perspective is key on why there is so much investor and policymaker attention to nuclear power.
Nuclear fuels accounted for about a tenth of the power units produced globally. However, they are almost a fifth of the global clean power generation. Now, power consumption is at another tripping point, and this is after tripling since 1980s. To give you a perspective, Tim, 25 trillion units of power were consumed worldwide last year, and we see this growing rapidly at a 25 percent pace in the next five years or so. And if you loo…
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Special Encore: Bracing for Sticker Shock
15 augustus 2025 · 9 min
Original Release Date: July 11, 2025 Lees meer
As U.S. retailers manage the impacts of increased tariffs, they have taken a number of approaches to avoid raising prices for customers. Our Head of Corporate Strategy Andrew Sheets and our Head of U.S. Consumer Retail and Credit Research Jenna Giannelli discuss whether they can continue to do so.
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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.
Jenna Giannelli: And I'm Jenna Giannelli, Head of U.S. Consumer and Retail Credit Research.
Andrew Sheets: And today on the podcast, we're going to dig into one of the biggest conundrums in the market today. Where and when are tariffs going to show up in prices and margins?
It's Friday, July 11th at 10am in New York.
Jenna, it's great to catch up with you today because I think you can really bring some unique perspective into one of the biggest puzzles that we're facing in the market today. Even with all of these various pauses and delays, the U.S. has imposed historically large tariffs on imports. And we're seeing a rapid acceleration in the amount of money collected from those tariffs by U.S. customs. These are real hard dollars that importers – or somebody else – are paying. Yet we haven't seen these tariffs show up to a significant degree in official data on prices – with recent inflation data relatively modest. And overall stock and credit markets remain pretty strong and pretty resilient, suggesting less effect.
So, are these tariffs just less impactful than expected, or is there something else going on here with timing and severity? And given your coverage of the consumer and retail sectors, which is really at the center of this tariff debate – what do you think is going on?
Jenna Giannelli: So yes, this is a key question and one that is dominating a lot of our client conversations. At a high level, I'd point to a few things. First, ther…
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A Divergence of Thought on the Fed’s Path
14 augustus 2025 · 4 min
The market thinks the Fed is likely to cut rates come September. Morgan Stanley economists disagree. Our Head of Corporate Credit Research Andrew Sheets explains our viewpoint and presents three scenarios for corporate credit. 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 big difference between our view and the market on what the Fed will do next month; and how that impacts our credit view.
It's Thursday, August 14th at 2pm in London.
As of this recording, the market is pricing in a roughly 97 percent chance that the Federal Reserve lowers interest rates at its meeting next month. But our economists think it remains more likely that they will leave this rate unchanged. It's a big divergence on a very important market debate.
But what may seem like a radical difference in view is actually, in my opinion, a pretty straightforward premise. The Federal Reserve has a so-called dual mandate tasked with keeping both inflation and unemployment low.
The unemployment rate is low, but the inflation rate – importantly – is not. In order to ensure that that inflation rate goes lower, absent a major weakening of the economy, we think it would be reasonable for the Fed to keep interest rates somewhat higher for somewhat longer. Hence, we forecast that the Fed will end up staying put at its September meeting.
Indeed, while the market rallied on this week's latest inflation numbers, they still leave the Fed with some pretty big questions. Core inflation in the US is above the Fed's target. It's been stuck near these levels now for more than a year. And based on this week's latest data, it started to actually tick up again, a trend that we think could continue over the next several readings as tariff impacts gradually come through.
And so, for credit, this presents three scenarios. One good, and two that are more troubling.
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Tariffs’ Impact on Economy and Bond Markets
13 augustus 2025 · 11 min
Although tariff negotiations continue, deals are being made, shifting investor focus on assessing the fallout. Our Global Head of Fixed Income Research and Public Policy Strategy Michael Zezas and Chief U.S. Economist Michael Gapen consider the ripple effects on inflation and the bond market. Lees meer
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----- Transcript -----
Michael Zezas: Welcome to Thoughts on the Market. I'm Michael Zezas, Global Head of Fixed Income Research and Public Policy Strategy.
Michael Gapen: And I'm Michael Gapen, Chief U.S. Economist.
Michael Zezas: Today, how are tariffs impacting the economy and what it means for bond markets?
It's Wednesday, August 13th at 10:30am in New York.
Michael, we've been talking about how the near-term uncertainty around tariff levels has come down. Tariff deals are, of course, still pending with some major U.S. trading partners like China; but agreements are starting to come together. And though there's lots of ways they could break over time, in the near-term, deals like the one with Europe signal that the U.S. might be happy for several months with what's been arranged. And so, the range of outcomes has shrunk.
The U.S.' current effective tariff rate of 16 percent is about where we thought we'd be at year end. But that's substantially higher than the roughly 3 percent we started the year with. So, not as bad as it looked like it could have been after tariffs were announced on April 2nd, but still substantially higher. Now's the time when investors should stay away from chasing tariff headlines and guessing what the President might do next; and instead focus on assessing the impact of what's been done.
With that as the backdrop, we got some relevant data yesterday, the Consumer Price Index for July. You were expecting that this would show some clear signs of tariffs pushing prices higher. Why was that?
Michael Gapen: Well, we did analysis on the 2018-2019 tariff episode. So, in looking at the input-output tables, w…
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The Credibility of Inflation Targets
12 augustus 2025 · 5 min
Can a central bank simply announce an inflation target and get everyone to believe it? Our Global Economist Arunima Sinha looks at the cases of South Africa and Brazil to explain why it’s a subject of decades-long debate. Lees meer
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----- Transcript -----
Arunima Sinha: Welcome to Thoughts on the Market. I'm Arunima Sinha, Global Economist at Morgan Stanley.
Today I'm going to talk about how inflation targets of central banks matter for market participants and economic activity.
It's Tuesday, August 12th at 10am in New York.
Tariff driven inflation is at the center of financial market debates right now. The received wisdom is that a central bank should look through one-off increases in prices if – and it is an important if – inflation expectations are anchored low enough. Inflation targets, inflation expectations, and central bank credibility have been debated for decades.
The Fed's much criticized view that COVID inflation would be transitory was based on the assumption that anchored inflation expectations would pull inflation down. The Fed is more cautious now after four years of above target inflation. Can a central bank simply announce an inflation target and get everyone to believe it?
Far away from the U.S., the South Africa Reserve Bank, SARB, is providing a real time experiment. The SARB’s inflation target was originally a range of 3 to 6 per cent, with an intention to shift to 2 to 4 percent over time. At its last meeting, the SARB announced that it was going to target the bottom end of the range, de facto shifting to a 3 percent target. A decision by the Ministry of Finance in the coming months is likely necessary to formalise the outcome, but the SARB has succeeded in pulling inflation down. It has established credibility, but we suspect that more work is needed to anchor inflation expectations firmly at 3 percent.
Key to the SARS challenge, as the Fed’s – the central bank cannot control all the drivers of inflation …
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How AI is Driving the Digital Revolution in Sports
11 augustus 2025 · 5 min
Morgan Stanley Research looks at how changes in demographics, ownership, and distribution can boost tech adoption to revolutionize the global sports industry. Lees meer
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----- Transcript -----
Cesar Medina: Welcome to Thoughts on the Market. I’m Cesar Medina, Morgan Stanley’s Latin America Technology, Media, and Telecom Analyst. Today – we discuss what’s driving the digital revolution in global sports. And what it means for fans as well as investors.
It’s Monday, August 11th, at 10am in New York.
These days, watching a sporting event at home usually means streaming the big game on a large 4K HDR screen. Maybe even 8K for premium events. You might access real time stats from a supporting app or social media on a secondary device. Maybe even have a group chat with friends.
But imagine a game with real-time personalized stats. Immersive alternate camera angles. Or even experiencing the match from a player's perspective—all powered by AI. These innovations are already being tested and rolled out in select leagues.
Global sports generates half a trillion dollars in annual revenues. Despite all that cash, until very recently the industry was slow to embrace digital technology, lagging behind movies and music. Now that’s changing – and fast.
So, what’s driving this transformation?
Three powerful forces are closing this digital gap. One – younger, tech-savvy audiences demanding more immersive and personalized experiences. Two – new distribution models, with digital platforms stepping into the arena. And three – institutional investment, bringing capital and a push for modernization.
You might ask – what does this all mean for fans, investors, and the future of entertainment?
Let’s start with fans. Today’s sports fans aren’t just watching—they’re interacting, betting, gaming, and sharing. And younger fans are leading the charge. They are spending more time online and expect hyper-personalized content. They're more interested in indivi…
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Backpacks, Laptops and Sneakers
8 augustus 2025 · 4 min
Our U.S. Thematic and Equity Strategist Michelle Weaver discusses what back-to-school spending trends reveal about consumer sentiment and the U.S. economy. 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 here at Morgan Stanley.
Today -- we're going back to school! A look at the second biggest shopping season in the U.S.. And what it can tell us about the broader market.
It’s Friday, August 8th, at 10am in New York.
It's that time of the year again. With parents, caregivers and students making shopping lists for back-to-school supplies. And it’s not just limited to school supplies and backpacks. It probably also includes laptops or tablets, smart phones and, of course, the latest clothes. For investors, understanding how consumers are feeling—and spending—right now is critical. Why? Because back-to-school spending tells us a lot about consumer sentiment. And this month’s data has been sending some mixed but meaningful signals.
Let’s start with the mood on Main Street. According to our latest proprietary consumer survey, confidence in the economy is sliding. Just under one-third of consumers think the economy will improve over the next six months—which is down from 37 percent last month and 44 percent in January. And that’s a pretty big drop from the start of the year. Meanwhile, half of all consumers expect the economy to get worse.
Household finances are also feeling the squeeze. While around 40 percent expect their financial situation to improve, closer to 30 percent expect it to worsen. The net score is still positive, but down from last month and even more so from January.
The takeaway? Consumers are feeling the pinch—and inflation remains their number one concern.
We did see a bit of a brighter picture though around tariff fears. And tariffs are definitely still a worry, but we’re past that point of peak fear. Th…
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A Whiff of Stagflation
7 augustus 2025 · 4 min
So far, markets have shown resilience, despite the volatility. However, our Head of Corporate Credit Research Andrew Sheets points out that economic data might tell a different story over the next few months, with a likely impact on yields. 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 – how a tricky two months could feel a lot like stagflation, and a lot different from what we’ve had so far this year.
It’s Thursday, August 7th, at 2pm in London.
For all the sound and fury around tariffs in 2025, financial markets have been resilient. Stocks are higher, bond yields are lower, credit spreads are near 20-year tights, and market volatility last month plummeted.
Indeed, we sense increasing comfort with the idea that markets were tested by tariffs – after all we’ve been talking about them since February – and weathered the storm. So far this year, growth has generally held up, inflation has generally come down, and corporate earnings have generally been fine.
Yet we think this might be a bit like a wide receiver celebrating on the 5-yard line. The tricky impact of tariffs? Well, it might be starting to show up in the data right now, with more to come over the next several months.
When thinking about the supposed risk from tariffs, it’s always been two fold: higher prices and then also less activity, given more uncertainty for businesses, and thus weaker growth.
And what did we see last week? Well, so-called core-PCE inflation, the Fed’s preferred inflation measure, showed that prices were once again rising and at a faster rate. A key report on the health of the U.S. jobs market showed weak jobs growth. And key surveys from the Institute of Supply Management, which are followed because the respondents are real people in the middle of real supply chains, cited lower levels of new orders, and higher prices being paid.
I…
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How Credit Markets Could Finance AI’s Trillion Dollar Gap
6 augustus 2025 · 9 min
Until now, the AI buildout has largely been self-funded. Our Chief Fixed Income Strategist Vishy Tirupattur and our Head of U.S. Credit Strategy Vishwas Patkar explain the role of credit markets to fund a potential financing gap of $1.5 trillion as spending on data centers and hardware keeps ramping up. 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.
Vishwas Patkar: And I'm Vishwas Patkar, Head of U.S. Credit Strategy at Morgan Stanley.
Vishy Tirupattur: Today we want to talk about the opportunities and challenges in the credit markets, in the context of AI and data center financing.
It's Wednesday, August 6th at 3pm in New York.
Vishy Tirupattur: So, Vishwas spending on AI and data centers is really not new. It's been going on for a while. How has this CapEx been financed so far predominantly? What has changed now? And why do we need greater involvement of credit markets of different stripes?
Vishwas Patkar: You're right, Vishy. So, CapEx on AI is certainly not new. So last year the hyperscalers alone spent more than $200 billion on AI related CapEx. What changes from here on, to your question, is the numbers just ramp up sharply. So, if you look at Morgan Stanley's estimates leveraging work done by our colleague Stephen Byrd over the next four years, there's about [$]2.9 trillion of CapEx that needs to be spent across hardware and data center bills.
So what changes is, while CapEx so far has been largely self-funded by hyperscalers, we think that will not be the case going forward. So, when we leverage the work that has been done by our equity research colleagues around how much the hyperscalers can spend, we've identified a [$]1.5 trillion financing gap that has to be met by external capital. And we think credit would play a big role in that.
Vishy Tirupattur: A financing gap of [$]1.5 trillion. Wow. That's a big nu…
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Higher Bar for September Rate Cut
5 augustus 2025 · 11 min
There’s a dichotomy between the pace of job growth and the unemployment rate. Our Chief U.S. Economist Michael Gapen and Global Head of Macro Strategy Matthew Hornbach analyze how the Fed might address this paradox. 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: Today – a look back at last week’s meeting of the Federal Open Market Committee or FOMC, and the path for rates from here.
It's Tuesday, August 5th at 10am in New York.
Mike, last week the Fed met for the fifth time this year. The committee didn't provide a summary of their economic projections, but they did update their official policy statement. And of course, Chair Powell spoke at the press conference. How would you characterize the tone of both?
Michael Gapen: Yeah, at first the statement I thought took on a slightly dovish tone for two reasons. One, unexpected; the other expected. So, the committee did revise down their assessment of growth and economic activity. They had previously described the economy as growing at a quote, ‘solid pace,’ and now they said, you know, the incoming data suggests that growth and economic activity moderated.
So that's true. That's actually our view as well. We think the data points to that. The second reason the statement looked a little dovish, and this was expected is the Fed received two dissents. So, Governors Bowman and Waller both dissented in favor of a 25 basis point rate cut at the July meeting.
But then the press conference started. And I would characterize that as Powell having at least some renewed concerns around persistence of inflation. So, he did recognize or acknowledge that the June inflation data showed a tariff impulse. But I'd say the more hawkish overtones really came in his description of the labor market, which I know were g…
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Why Stocks Get Ahead of the Fed
4 augustus 2025 · 4 min
Economic data looks backward while equity markets are looking ahead. Our CIO and Chief U.S. Equity Strategist Mike Wilson explains why this delays the Federal Reserve in both cutting and hiking rates – and why this is a feature of monetary policy, not a bug. 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 economic data can be counterintuitive for how stocks trade.
It's Monday, August 4th at 11:30am in New York.
So, let’s get after it.
Since the lows in April, the rally in stocks has been relentless with no tradable pullbacks. I have been steadfastly bullish since early May primarily due to the V-shaped recovery in earnings revisions breadth that began in mid-April. The rebound in earnings revisions has been a function of the positive reflexivity from max bearishness on tariffs, the AI capex cycle bottoming, and the weaker U.S. dollar. Now, cash tax savings from the One Big Beautiful Bill are an additional benefit to cash flow which should drive higher capital spending and M&A.
As usual, stocks have traded ahead of the positive sentiment and the lagging economic data – which leads me to the main point for today.
Weak labor data last week may worry some investors in the short term. But ultimately we see that as just another positive catalyst for stocks. Further deterioration would simply get the Fed to start cutting rates sooner and more aggressively.
The bond market seems to agree and is now pricing a 90 percent chance of a Fed cut in September, and the 2-year Treasury yield is 80 basis points below the fed[eral] funds rate. This spread is not nearly as severe as last summer when it reached 200 basis points. However, it will widen further if next month's labor data is disappointing again.
While weaker economic data could lead to further weakness in equities, the labor data is arguably the most…
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Why Markets Remain Murky on Tariff Fallout
1 augustus 2025 · 10 min
While investors may now better understand President Trump’s trade strategy, the economic consequences of tariffs remain unclear. Our Global Head of Fixed Income Research and Public Policy Michael Zezas and our Chief U.S. Economist Michael Gapen offer guidance on the data they are watching. Lees meer
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----- Transcript -----
Michael Zezas: Welcome to Thoughts on the Market. I'm Michael Zezas, Global Head of Fixed Income Research and Public Policy Strategy.
Michael Gapen: And I'm Michael Gapen, Chief U.S. Economist.
Michael Zezas: Today ongoing effects of tariffs on the U.S. economy.
It is Friday, August 1st at 8am in New York.
So, Michael, lots of news over the past couple of weeks about the U.S. making trade agreements with other countries. It's certainly dominated client conversations we've had, as I'm assuming it's probably dominated conversations for you as well.
Michael Gapen: Yeah certainly a topic that never goes away. It keeps on giving at this point in time. And I guess, Michael, what I would ask you is, what do you make of the recent deals? Does it reduce uncertainty in your mind? Does it leave uncertainty elevated? What’s your short-term outlook for trade policy?
Michael Zezas: Yeah, I think it's fair to say that we've reduced the range of potential outcomes in the near term around tariff rates. But we haven't done anything to reduce longer term uncertainties in U.S. trade policy.
So, consider, for example, over the last couple of weeks, we have an agreement with Japan and an agreement with Europe – two pretty substantial trading partners – where it appears, the tariff rate that's going to be applied is something like 15 percent. And when you stack up these deals on one another, it looks like we're going to end up in an average effective tariff rate from the U.S. range of kind of 15 to 20 percent. And if you think back a couple of months, that range was much wider and we were potentially talking about levels in the 25…
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How Waning American Dominance Could Move Yields
31 juli 2025 · 12 min
Lisa Shalett, our Wealth Management CIO, and Andrew Sheets, our Head of Corporate Credit Research, conclude their discussion of American Exceptionalism, factoring in fixed income, in the second of a two-part episode. 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.
Lisa Shalett: And I'm Lisa Shalett, Chief Investment Officer for Morgan Stanley Wealth Management.
Andrew Sheets: Today – a today a concluding look at the theme of American exceptionalism and how it factors into fixed income.
It's Thursday, July 31st at 4pm in London.
Lisa Shalett: And it's 11am here in New York.
So, Andrew, it's my turn to ask you some questions. And yesterday we talked a lot about equity markets, globalization, some of the broader macro shifts. But I wanted to zoom in on the credit markets today and one of our themes in the American Exceptionalism paper was the constraints of debts and deficits and how they play in. With U.S. debts level soaring and interest costs rising, how concerned should investors be?
Andrew Sheets: So, you alluded to this a bit on our discussion yesterday that we are in a very interesting divide where you have inequality between very well-off companies and weaker companies that aren't doing as well. You have a lot of division within households between those who are, doing better and struggling more with the rate environment.
But you know, I think we also see that the large deficits that the U.S. Federal government are running are in some ways largely mirrored by very, very good private sector financial positions. In aggregate U.S. households have record levels of assets relative to debt at the end of 2024; in aggregate the financial position of the U.S. equity market has never been better.
And so, this is a dynamic where lending to the private sector, whether that is to parts of the residential mortgage market or to th…
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Is American Market Dominance Over?
30 juli 2025 · 12 min
In the first of a two-part episode, Lisa Shalett, our Wealth Management CIO, and Andrew Sheets, our Head of Corporate Credit Research, discuss whether the era of “American Exceptionalism” is ending and how investors should prepare for a global market rebalancing. 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.
Lisa Shalett: And I'm Lisa Shalett, Chief Investment Officer for Morgan Stanley Wealth Management.
Andrew Sheets: Today, the first of two episodes tackling a fascinating and complex question. Is American market dominance ending? And what would that mean for investors?
It's Wednesday, July 30th at 4pm in London.
Lisa Shalett: And it's 11am here in New York.
Andrew Sheets: Lisa, it's so great to talk to you again, and especially what we're going to talk about over these two episodes. , a theme that's been coming up regularly on this podcast is this idea of American exceptionalism. This multi-year, almost multi-decade outperformance of the U.S. economy, of the U.S. currency, of the U.S. stock market.
And so, it's great to have you on the show, given that you've recently published on this topic in a special report, very topically titled American Exceptionalism: Navigating the Great Rebalancing.
So, what are the key pillars behind this idea and why do you think it's so important?
Lisa Shalett: Yeah. So, I think that that when you think about the thesis of American exceptionalism and the duration of time that the thesis has endured. I think a lot of investors have come to the conclusion that many of the underpinnings of America's performance are just absolutely inherent and foundational, right?
They'll point to America as a, economy of innovation. A market with regulation and capital markets breadth and depth and liquidity a market guided by, , laws and regulation, and a market where, heretofore, we've had relatively d…
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A Good Time to Buy the Dip?
29 juli 2025 · 5 min
AI adoption, dollar weakness and tax savings from the Big Beautiful Bill are some of the factors boosting our CIO and Chief U.S. Equity Strategist Mike Wilson’s confidence in 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 will discuss what's driving my optimism on stocks.
It's Tuesday, July 29th at 11:30am in New York.
So, let’s get after it.
Over the past few weeks, I have been leaning more toward our bull case of 7200 for the S&P 500 by the middle of next year. This view is largely based on a more resilient earnings and cash flow backdrop than anticipated. The drivers are numerous and include positive operating leverage, AI adoption, dollar weakness, cash tax savings from the Big Beautiful Bill, and easy growth comparisons and pent-up demand for many sectors in the market.
While many are still focused on tariffs as a headwind to growth, our analysis shows that tariff cost exposures for S&P 500 industry groups is fairly contained given the countries in scope and the exemptions that are still in place from the USMCA. Meanwhile, deals are being signed with our largest trading partners like Japan and Europe that appear favorable to the U.S.
Due to the lack of pricing power, the main area of risk in the stock market from tariffs is consumer goods; and that’s why we remain underweight that sector. However, the main tariff takeaway for investors is that the rate of change on policy uncertainty peaked in early April. This is the primary reason why earnings guidance bottomed in April as evidenced by the significant inflection higher in earnings revisions breadth—the key fundamental factor that we have been focused on.
Of course, the near-term set up is not without risks. These include still high long-term interest rates, tariff-related inflation and potential margin pressure. As a result, a correction is po…
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Singapore’s $4 Trillion Transformation
28 juli 2025 · 5 min
Our Head of ASEAN Research Nick Lord discusses how Singapore’s technological innovation and market influence are putting it on track to continue rising among the world’s richest countries. Lees meer
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----- Transcript -----
Welcome to Thoughts on the Market. I’m Nick Lord, Morgan Stanley’s Head of ASEAN Research.
Today – Singapore is about to celebrate its 60th year of independence. And it’s about to enter its most transformative decade yet.
It’s Monday, the 28th of July, at 2 PM in Singapore.
Singapore isn’t just marking a significant birthday on August 9th. It’s entering a new era of wealth creation that could nearly double household assets in just five years. That’s right—we’re projecting household net assets in the city state will grow from $2.3 trillion today to $4 trillion by 2030.
So, what’s driving this next chapter?
Well, Singapore is evolving from a safe harbor for global capital into a strategic engine of innovation and influence driven by three major forces. First, the country’s growing role as a global hub. Second, its early and aggressive adoption of new technologies. And last but not least, a bold set of reforms aimed at revitalizing its equity markets.
Together, these pillars are setting the stage for broad-based wealth creation—and investors are taking notice.
Singapore is home to just 6 million people, but it’s already the fourth-richest country in the world on a per capita basis. And it's not stopping there.
By 2030, we expect the average household net worth to rise from $1.6 million to an impressive $2.5 million. Assets under management should jump from $4 trillion to $7 trillion. And the MSCI Singapore Index could gain 10 percent annually, potentially doubling in value over the next five years. Return on equity for Singaporean companies is also set to rise—from 12 percent to 14 percent—thanks to productivity gains, market reforms, and stronger shareholder returns.
But let me come back to this first pillar…
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Who Will Fund AI’s $3 Trillion Ask?
25 juli 2025 · 5 min
Joining the AI race also requires building out massive physical infrastructure. Our Head of Corporate Credit Research Andrew Sheets explains why credit markets may play a critical role in the endeavor. 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 – how the world may fund $3 trillion of expected spending on AI.
It's Friday July 25th at 2pm in London.
Whether you factor it in or not, AI is rapidly becoming a regular part of our daily lives. Checking the weather before you step out of the house. Using your smartphone to navigate to your next destination, with real time traffic updates. Writing that last minute wedding speech. An app that reminds you to take your medication or maybe reminds you to power off your device.
All of these capabilities require enormous physical infrastructure, from chips to data centers, to the electricity to power it all. And however large AI is seen so far, we really haven't seen anything yet. Over the next five years, we think that global data center capacity increases by a factor of six times. The cost of this spending is set to be extraordinary. $3 trillion by the end of 2028 on just the data centers and their hardware alone.
Where will all this money come from?
In a recent deep dive report published last week, a number of teams within Morgan Stanley Research attempted to answer just that. First, large cap technology companies, which are also commonly called the hyperscalers. Well, they are large and profitable. We think they may fund half of the spending out of their own cash flows.
But that leaves the other half to come from outside sources. And we think that credit markets – corporate bonds, securitized credit, asset-backed finance markets – they're gonna have a large role to play, given the enormous sums involved.
For corporate bonds, the asset class closest to my heart, we estim…
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Trump‘s AI Action Plan
24 juli 2025 · 6 min
The Trump administration unveiled a 28-page AI Action Plan, outlining more than 90 policy actions, with an ambition for the U.S. to win the AI race. Our Global Head of Fixed Income Research and Public Policy Strategy Michael Zezas, and U.S. Public Policy Strategist Ariana Salvatore, explain why investors need to keep an eye on AI policy. Lees meer
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----- Transcript -----
Michael Zezas: Welcome to Thoughts on the Market. I'm Michael Zezas, 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 we're diving into the administration's newly released AI action plan. What's in It, what it means for markets, and where the challenges to implementation might lie.
It's Thursday, July 24th at 10am in New York.
Things are not all quiet on the policy front, but with the fiscal bill having passed Congress and trade tensions simmering ahead of the new August 1st deadline, clients are asking what the administration might focus on that investors might need to know more about.
Well, this week it seems to be AI.
The White House just unveiled its sweeping AI Action Plan, the first big policy-signaling document since the administration canceled the implementation of former President Biden's AI Diffusion Rule. So, Ariana, what do we need to focus on here?
Ariana Salvatore: This document is basically the administration signaling how it intends to cement America's role in the global development of AI – through a mix of both domestic and global policy initiatives. There are over 90 policy actions outlined in the document across three main pillars: innovation, infrastructure, and global leadership.
Michael Zezas: That's right. And even though there's still some important details to flesh out here in terms of what these initiatives might practically mean, it's worth delving into what the different areas are outlining and what it might mean for inve…
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Will the Entertainment Business Stay Human?
23 juli 2025 · 5 min
Our U.S. Media & Entertainment Analyst Benjamin Swinburne discusses how GenAI is transforming content creation, distribution and also raising some serious ethical questions. Lees meer
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----- Transcript -----
Welcome to Thoughts on the Market. I’m Ben Swinburne, Morgan Stanley’s U.S. Media and Entertainment Analyst. Today – GenAI is poised to shake up the entertainment business.
It’s Wednesday, July 23, at 10am in New York.
It's never been easier to create art for anyone – with a little help from GenerativeAI. You can transform photos of yourself or loved ones in the style of a popular Japanese movie studio or any era of visual art to your liking. You can create a short movie by simply typing in a few prompts. Even I can speak to youin several different languages. I can ask about the weather:
Hvordan er været i dag?
Wie ist das wetter heute?
आज मौसम कैसा है?
In the media and entertainment industry, GenAI is expected to bring about a seismic shift in how content is made and consumed. A recent production used AI to de-age actors and recreate the likeness of a deceased performer—cutting what used to take hundreds of VFX artists a year to just a few months with a small team. There are many other examples of how GenAI is revolutionizing how stories are told, from scriptwriting and editing to visual effects and dubbing.
In music, GenAI is helping music labels identify emerging talent and generate new compositions. GenAI can even create songs using the voices of long-gone artists – potentially extending revenue far beyond an artist’s lifetime.
GenAI-driven tools have the potential to reduce TV and film production costs by 10–30 percent, with animation and post-production among the biggest savings opportunities. GenAI could also transform how content reaches audiences. Recommendation engines can become even more predictive, using behavioral data to serve up exactly what listeners want—sometimes before we know what we want.
And there’…
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Asia’s $46 Trillion Question
22 juli 2025 · 5 min
Our Chief Asia Economist Chetan Ahya discusses three key decisions that will determine Asia’s international investment position and affect currency trends. Lees meer
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----- Transcript -----
Welcome to Thoughts on the Market. I’m Chetan Ahya, Morgan Stanley’s Chief Asia Economist.
Today – an issue that’s gaining traction in boardrooms and trading floors: the three big decisions Asia investors are facing right now.
It’s Tuesday, July 22nd, at 2 PM in Hong Kong.
So, let’s start with the big picture.
Over the past 13 years, Asia’s international investment position has doubled to $46 trillion. A sizable proportion of that is invested in U.S. assets.
But the recent weakness in the U.S. dollar gives rise to three important questions for investors across Asia: Should they diversify away from U.S. assets? How much of Asia’s incremental savings should be allocated to the U.S.? Or should they hedge their U.S. exposure more aggressively?
First on the diversification debate. Investors are voicing concern over the U.S. macro outlook, given the twin deficits. At the same time, our U.S. economics team continues to see growth slowing, as better than expected fiscal impulse in the near term will not fully offset the drag from tariffs and tighter immigration policies.
This convergence in U.S. growth and interest rates with global peers—and continued debate about the U.S. dollar’s safe haven status has already led to U.S. dollar depreciation. And our macro strategists expect further depreciation of the U.S.D by another 8-9 percent by [the] second quarter of next year.
So what is the data indicating? Are investors already diversifying?
Let’s look at Asia’s security portfolio as that data is more transparently available. Out of the total international investment of $46 trillion dollars, Asia’s securities portfolio alone is worth $21 trillion. And of that, $8.6 trillion is in U.S. assets as of [the] first quarter of 2025. Now here’s an interesting…
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Can a ‘Shadow Chair’ Steer the Fed?
21 juli 2025 · 5 min
As Fed Chair Jerome Powell’s term ends next year, our Global Chief Economist Seth Carpenter discusses the potential policy impact of a so-called “shadow Fed chair”. Lees meer
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----- Transcript -----
Welcome to Thoughts on the Market. I’m Seth Carpenter, Morgan Stanley’s Global Chief Economist. And today – well, there’s a topic that’s stirring up a lot of speculation on Wall Street and in Washington. It’s this idea of a Shadow Fed Chair.
It’s Monday, July 21, at 2 PM in New York.
Let’s start with the basics. Fed Chair Jerome Powell’s term expires in May of next year. And look at any newspaper that covers the economy or markets, and you will see that President Trump has been critical of monetary policy under Chair Powell. Those facts have led to a flurry of questions: Who might succeed Chair Powell? When will we know? And—maybe most importantly—how should investors think about these implications?
President Trump has been clear in his messaging: he wants the Fed to cut rates more aggressively. But even though it seems clear that there will be a new Chair in June of next year, market pricing suggests a policy rate just above 3 percent by the end of next year. That level is lower than the current Fed rate of 4.25 [percent] to 4.50 [percent], but not aggressively so. In fact, Morgan Stanley’s base case is that the policy rate is going to be even a bit lower than market pricing suggests.
So why this disconnect?
First, although there are several names that have been floated by media sources, and the Secretary of the Treasury has said that a process to select the next Chair has begun, we really just don’t know who Powell’s successor would be. News reports suggest we will get a name by late summer though.
Another key point, from my perspective, is even when Powell’s term as Chair ends, the Fed’s reaction function—which is to say how the Fed reacts to incoming economic data—well, it’s probably not going to change overnight. The Federal Op…
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No Summer Slowdown for Markets – Yet
18 juli 2025 · 4 min
Markets may seem calm following recent policy headlines, but for Michael Zezas, our Global Head of Fixed Income Research and Public Policy Strategy, investors may need to wait on more data to assess whether the macroenvironment will remain stable. Lees meer
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----- Transcript -----
Michael Zezas: Welcome to Thoughts on the Market. I'm Michael Zezas, Global Head of Fixed Income Research and Public Policy Strategy.
Today: Why there's no summer slowdown yet for U.S. policy catalysts for the financial markets.
It's Friday, July 18th at 8am in New York.
The past week and a half has seen many major policy, events and headlines relevant to the outlook for financial markets. This includes more speculation by the U.S. administration over leadership at the Fed, more information about the deficit impact of the new fiscal bill, and – perhaps most tangibly – announcements of new tariffs that, if they take effect, will be a meaningful step up from already elevated levels.
It would all suggest a weaker growth outlook and less overseas demand for U.S. assets. Yet major financial markets seem to have shrugged it all off. The S & P and the U.S. dollar are up about 1 percent over that time, and Treasury yields are modestly higher.
So, what's going on? Two possibilities to consider, and it implies investors should pay more attention than they may be inclined to this summer.
First, when it comes to the impact of tariffs on the economy, it's possible we're dealing with a delayed impact. The effective average U.S. tariff rate shot up from 3 to 4 percent earlier this year to 13 percent, and if recent announcements go through, that could exceed 20 percent. That's a major escalation in costs for U.S. companies and consumers and something our economists argue takes growth down to 1 percent and elevates the possibility of a recession.
But our economists also point out that we may not be experiencing these cost increases quite yet. History suggests several…
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How a Weaker Dollar Could Boost U.S. Stocks
17 juli 2025 · 8 min
The dollar’s bearish run is likely to affect U.S. equity markets. Michelle Weaver, our U.S. Thematic & Equity Strategist, and David Adams, our Head of G10 FX Strategy, discuss what investors should consider. Lees meer
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----- Transcript -----
Michelle Weaver: Welcome to Thoughts on the Market. I'm Michelle Weaver, U.S. Thematic and Equity strategist at Morgan Stanley.
David Adams: And I'm Dave Adams, head of G10 FX Strategy here at Morgan Stanley.
Michelle Weaver: Our colleagues were recently on the show to talk about the impact of the weak dollar on European equities. And today we wanted to continue that conversation by looking at what a weak U.S. dollar means for the U.S. equity market.
It's Thursday, July 17th at 2pm in London.
Morgan Stanley has a bearish view on the U.S. dollar. And this is something our chief global FX strategist James Lord spoke about recently on the show. But Dave, I want to go over the outlook again, since Morgan Stanley has a really differentiated view on this. Do you think the dollar will continue to depreciate during the remainder of the year?
David Adams: We do, and we do. We have been dollar bears this whole year, and it has been very out of consensus. But we do think the weakness will continue and our forecasts remain one of the most bearish on the street for the dollar.
The dollar has had its worst first half of the year since 1973, and the dollar index has fallen about 10 percent year to date, but we think we're at the intermission rather than the finale. The second act for the dollar weakening trend should come over the next 12 months as U.S. interest rates and U.S. growth rates converge to that of the rest of the world. And FX hedging of existing U.S. assets held by foreign investors adds further negative risk premium to the dollar. The result is that we're looking for yet another 10 percent drop in the dollar by the end of next year.
Michelle Weaver: That's really interesting and a different…
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Coming Soon: The Tariff Hit on Economic Data
16 juli 2025 · 4 min
U.S. tariffs have had limited impact so far on inflation and corporate earnings. Our Head of Corporate Credit Research Andrew Sheets explains why – and when – that might change. 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 I'm going to talk about why tariffs are showing up everywhere – but the data; and why we think this changes this quarter.
It's Wednesday, July 16th at 2pm in London.
Investors have faced tariff headlines since at least February. The fact that it's now mid-July and markets are still grinding higher is driving some understandable skepticism that they're going to have their promised impact. Indeed, we imagine that maybe more of one of you is groaning and saying, ‘What? Another tariff episode?’
But we do think this theme remains important for markets. And above all, it's a factor we think is going to hit very soon. We think it's kind of now – the third quarter – when the promised impact of tariffs on economic data and earnings really start to come through.
My colleague Jenna Giannelli and I discussed some of the reasons why, on last week's episode focused on the retail sector. But what I want to do next is give a little bit of that a broader context.
Where I want to start is that it's really about tariff impact picking up right about now. The inflation readings that we got earlier this week started to show US core inflation picking up again, driven by more tariff sensitive sectors. And while second quarter earnings that are being reported right about now, we think will generally be fine, and maybe even a bit better than expected; the third quarter earnings that are going to be generated over the next several months, we think those are more at risk from tariff related impact. And again, this could be especially pronounced in the consumer and retail sector.
So why have tariffs not mattered so much s…
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The End of the U.S. Dollar’s Bull Run?
16 juli 2025 · 13 min
Our analysts Paul Walsh, James Lord and Marina Zavolock discuss the dollar’s decline, the strength of the euro, and the mixed impact on European equities. Lees meer
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----- Transcript -----
Paul Walsh: Welcome to Thoughts on the Markets. I'm Paul Walsh, Morgan Stanley's Head of European Product. And today we're discussing the weakness we've seen year-to-date in the U.S. dollar and what this means for the European stock market.
It's Tuesday, July the 15th at 3:00 PM in London.
I'm delighted to be joined by my colleagues, Marina Zavolock, Morgan Stanley's Chief European Equity Strategist, and James Lord, Morgan Stanley's Chief Global FX Strategist.
James, I'm going to start with you because I think we've got a really differentiated view here on the U.S. dollar. And I think when we started the year, the bearish view that we had as a house on the U.S. dollar, I don't think many would've agreed with, frankly. And yet here we are today, and we've seen the U.S. dollar weakness proliferating so far this year – but actually it's more than that.
When I listen to your view and the team's view, it sounds like we've got a much more structurally bearish outlook on the U.S. dollar from here, which has got some tenure. So, I don't want to steal your thunder, but why don't you tell us, kind of frame the debate, for us around the U.S. dollar and what you're thinking.
James Lord: So, at the beginning of the year, you're right. The consensus was that, you know, the election of Donald Trump was going to deliver another period of what people have called U.S. exceptionalism.
Paul Walsh: Yeah.
James Lord: And with that it would've been outperformance of U.S. equities, outperformance of U.S. growth, continued capital inflows into the United States and outperformance of the U.S. dollar.
At the time we had a slightly different view. I mean, with the help of the economics team, we took the other side of that debate largely on the assumption that actually…
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How Wall Street Is Weathering the Tariff Storm
14 juli 2025 · 4 min
Stocks hold steady as tariff uncertainty continues. Our CIO and Chief U.S. Equity Strategist Mike Wilson explains how policy deferrals, earnings resilience and forward guidance are driving the market. 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 stocks remain so resilient.
It's Monday, July 14th at 11:30am in New York.
So, let’s get after it.
Why has the equity market been resilient in the face of new tariff announcements? Well first, the import cost exposure for S&P 500 industries is more limited given the deferrals and exemptions still in place like the USMCA compliant imports from Mexico. Second, the higher tariff rates recently announced on several trading partners are generally not perceived to be the final rates as negotiations progress. I continue to believe these tariffs will ultimately end up looking like a 10 percent consumption tax on imports that generate significant revenue for the Treasury. And finally, many companies pre-stocked inventory before the tariffs were levied and so the higher priced goods have not yet flowed through the cost of goods sold.
Furthermore, with the market’s tariffs concerns having peaked in early April, the market is looking forward and focused on the data it can measure. On that score, the dramatic v-shaped rebound in earnings revisions breadth for the S&P 500 has been a fundamental tailwind that justifies the equity rally since April in the face of continued trade and macro uncertainty. This gauge is one of our favorites for predicting equity prices and it troughed at -25 percent in mid-April. It’s now at +3 percent. The sectors with the most positive earnings revisions breadth relative to the S&P 500 are Financials, Industrials and Software — three sectors we continue to recommend due to this dynamic.
The other more recent development helping to supp…
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Bracing for Sticker Shock
11 juli 2025 · 9 min
As U.S. retailers manage the impacts of increased tariffs, they have taken a number of approaches to avoid raising prices for customers. Our Head of Corporate Strategy Andrew Sheets and our Head of U.S. Consumer Retail and Credit Research Jenna Giannelli discuss whether they can continue to do so. 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.
Jenna Giannelli: And I'm Jenna Giannelli, Head of U.S. Consumer and Retail Credit Research.
Andrew Sheets: And today on the podcast, we're going to dig into one of the biggest conundrums in the market today. Where and when are tariffs going to show up in prices and margins?
It's Friday, July 11th at 10am in New York.
Jenna, it's great to catch up with you today because I think you can really bring some unique perspective into one of the biggest puzzles that we're facing in the market today. Even with all of these various pauses and delays, the U.S. has imposed historically large tariffs on imports. And we're seeing a rapid acceleration in the amount of money collected from those tariffs by U.S. customs. These are real hard dollars that importers – or somebody else – are paying. Yet we haven't seen these tariffs show up to a significant degree in official data on prices – with recent inflation data relatively modest. And overall stock and credit markets remain pretty strong and pretty resilient, suggesting less effect.
So, are these tariffs just less impactful than expected, or is there something else going on here with timing and severity? And given your coverage of the consumer and retail sectors, which is really at the center of this tariff debate – what do you think is going on?
Jenna Giannelli: So yes, this is a key question and one that is dominating a lot of our client conversations. At a high level, I'd point to a few things. First, there's a timing issue here. So, when tari…
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The Future Reckoning of Tariff Escalation
10 juli 2025 · 4 min
The ultimate market outcomes of President Trump’s tactical tariff escalation may be months away. Our Global Head of Fixed Income Research and Public Policy Strategy Michael Zezas takes a look at implications for investors now. 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: The latest on U.S. tariffs and their market impact.
It’s Thursday, July 10th at 12:30pm in New York.
It's been a newsy week for U.S. trade policy, with tariff increases announced across many nations. Here’s what we think investors need to know.
First, we think the U.S. is in a period of tactical escalation for tariff policy; where tariffs rise as the U.S. explores its negotiating space, but levels remain in a range below what many investors feared earlier this year. We started this week expecting a slight increase in U.S. tariffs—nothing too dramatic, maybe from 13 percent to around 15 percent driven by hikes in places like Vietnam and Japan. But what we got was a bit more substantial.
The U.S. announced several tariff hikes, set to take effect later, allowing time for negotiations. If these new measures go through, tariffs could reach 15 to 20 percent, significantly higher than at the beginning of the year, though far below the 25 to 30 percent levels that appeared possible back in April. It’s a good reminder that U.S. trade policy remains a moving target because the U.S. administration is still focused on reducing goods trade deficits and may not yet perceive there to be substantial political and economic risk of tariff escalation. Per our economists’ recent work on the lagged effects of tariffs, this reckoning could be months away.
Second, the implications of this tactical escalation are consistent with our current cross-asset views. The higher tariffs announced on a variety of geographies, and products like copper, put further pressure on the U.…
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Are Foreign Investors Fleeing U.S. Assets?
9 juli 2025 · 5 min
Our Chief Cross-Asset Strategist Serena Tang discusses whether demand for U.S. stocks has fallen and where fund flows are surging. Lees meer
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----- Transcript -----
Serena Tang: Welcome to Thoughts on the Market. I’m Serena Tang, Morgan Stanley’s Chief Cross-Asset Strategist.
Today – is the demand for U.S. assets declining? Let's look at the recent trends in global investment flows.
It’s Wednesday, July 9th at 1pm in New York.
The U.S. equity market has reached an all-time high, but at the same time lingering uncertainty about U.S. trade and tariff policies is forcing global investors to consider the riskiness of U.S. assets. And so the big question we need to ask is: are investors – particularly foreign investors – fleeing U.S. assets?
This question comes from recent data around fund flows to global equities. And we have to acknowledge that demand for U.S. stocks overall has declined, going by high-frequency data. But at the same time, we think this idea is exaggerated.
So why is that? As many listeners know, fund flows – which represent the net movement of money into and out of various investment vehicles like mutual funds and ETFs – are an important gauge of investor sentiment and market trends. So what are fund flows really telling us about investors’ sentiment towards U.S. equities? It would be nice to get an unequivocal answer, but of course, the devil is always in the details. And the problem is that different data sources and frequencies across different market segments don’t always lead to the same conclusions.
Weekly data across global equity ETF and mutual funds from Lipper show that international investors were net buyers through most of April and May. But the pace of buying has slowed year-to-date versus 2024. Still, it remains much higher than during the same period in 2021 through 2023. Treasury TIC data point to something similar – a slowdown in foreign demand, but not significant net selling.
So where are the …
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How AI Is Disrupting Defense
8 juli 2025 · 10 min
Arushi Agarwal from the European Sustainability Strategy team and Aerospace & Defense Analyst Ross Law unpack what a reshaped defense industry means for sustainability, ethics and long-term investment strategy. Lees meer
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----- Transcript -----
Ross Law: Welcome to Thoughts on the Market. I'm Ross Law from Morgan Stanley's European Aerospace and Defense team.
Arushi Agarwal: And I'm Arushi Agarwal from the European Sustainability Research Team.
Ross Law: Today, a topic that's rapidly defining the boundaries of sustainable investing and technological leadership – the use of AI in defense.
It's Tuesday, July 8th at 3pm in London.
At the recent NATO summit, member countries decided to boost their core defense spending target from 2 percent to 3.5 percent of GDP. This big jump is sure to spark a wave of innovation in defense, particularly in AI and military technology. It's clear that Europe is focusing on rearmament with AI playing a major role.
In fact, AI is revolutionizing everything from unmanned systems and cyber defense to simulation training and precision targeting. It’s changing the game for how nations prepare for – and engage in – conflict.
And with all these changes come serious challenges. Investors, policy makers and technologists are facing some tough questions that sit at the intersection of two of Morgan Stanley's four key themes: The Multipolar World and Tech Diffusion.
So, Arushi, to set the stage, how is the concept of sustainability evolving to include national security and defense, particularly in Europe?
Arushi Agarwal: You know, Ross, it's fascinating to see how much this space has evolved over the past year. Geopolitical tensions have really pushed national security much higher on the sustainability agenda. We're seeing a structural shift in sentiment towards defense investments.
While historically defense companies were largely excluded by sustainability funds, we're now seeing asset managers revisiting…
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Have U.S. Consumers Shaken Off Tariff Concerns?
7 juli 2025 · 4 min
The American consumer isn’t simply pulling back. They are changing the way they spend – and save. Our U.S. Thematic and Equity Strategist Michelle Weaver digs into the data. 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, the U.S. consumer. What's changing about the ways Americans spend, save and feel about the future?
It's Monday, July 7th at 10am in London.
As markets digest mixed signals – whether that's easing inflation, changing politics, and persistent noise around tariffs – U.S. consumers are recalibrating. Under the surface of headline numbers, a more complex story is unfolding about the ways Americans are not just reacting but adapting to macro challenges.
First, I want to start with a big picture. Data from our latest consumer survey shows that consumer sentiment has stabilized, even as uncertainty around tariffs persists, especially into these rolling July deadlines. Inflation remains the top concern for most. But the good news is that it's trending lower. This month more than half of respondents cited inflation as their primary concern, a slight decrease from last month and a year ago. Now, that's a subtle but a meaningful decline suggesting consumers may be adjusting their expectations rather than bracing for continued price shocks. At the same time though political concerns are on the rise. More than 40 percent of consumers now list the U.S. political environment as a major worry. That's slightly up from last month; and not surprisingly concern around geopolitical conflicts has also jumped from a month ago.
Now, when we break this down by income levels, we see some interesting trends. Inflation is the top concern across all income groups, except for those earning more than $150,000. For them, politics takes the top spot. Lower income households, though, are more focused on paying rent and debts, w…
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America’s Debt Story
3 juli 2025 · 4 min
For a special Independence Day episode, our Head of Corporate Credit Research considers a popular topic of debate, on holidays or otherwise – national debt. 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 on a special Independence Day episode of the podcast, we're going to talk a bit about the history of U.S. debt and the contrast between corporate and federal debt trajectories.
It's Thursday, July 3rd at 9am in Seattle.
The 4th of July, which represents the U.S. declaring independence from Great Britain, remains one of my favorite holidays. A time to gather with friends and family and celebrate what America is – and what it can still be.
It is also, of course, a good excuse to talk about debt.
Declaring independence is one thing, but fighting and beating the largest empire in the world at the time would take more than poetic words. The borrowing that made victory possible for the colonies also almost brought them down in the 1780s under a pile of unsustainable debt. It was a young treasury secretary Alexander Hamilton, who successfully lobbied to bring these debts under a federal umbrella – binding the nation together and securing a lower borrowing cost. As we'd say, it's a real fixed income win-win.
Almost 250 years later, the benefits of that foresight are still going strong, with the United States of America enjoying the world's largest economy, and the largest and most liquid equity and bond markets. Yet lately there's been more focus on whether those bond markets are, well, too large.
The U.S. currently runs a budget deficit of about 7 percent of GDP, and the current budget proposals in the house and the Senate could drive an additional 4 trillion of borrowing over the next decade above that already hefty baseline. Forecast even further out, well, they look even more challenging.
We are not worried about the…
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Three Possibilities for What’s Next on Tariffs
2 juli 2025 · 5 min
Our analysts Michael Zezas and Ariana Salvatore discuss the upcoming expiration of reciprocal tariffs and the potential impacts for U.S. trade. Lees meer
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Michael Zezas: Welcome to Thoughts on the Market. I'm Michael Zezas, global Head of Fixed Income Research and Public Policy Strategy.
Ariana Salvatore: And I'm Ariana Salvatore, US Public Policy Strategist.
Michael Zezas: Today we're talking about the outlook for US trade policy. It's Wednesday, July 2nd at 10:00 AM in New York.
We have a big week ahead as next Wednesday marks the expiration of the 90 day pause on reciprocal tariffs. Ariana, what's the setup?
Ariana Salvatore: So this is a really key inflection point. That pause that you mentioned was initiated back on April 9th, and unless it's extended, we could see a reposition of tariffs on several of our major trading partners. Our base case is that the administration, broadly speaking, tries to kick the can down the road, meaning that it extends the pause for most countries, though the reality might be closer to a few countries seeing their rates go up while others announce bilateral framework deals between now and next week.
But before we get into the key assumptions underlying our base case. Let's talk about the bigger picture. Michael, what do we think the administration is actually trying to accomplish here?
Michael Zezas: So when it comes to defining their objectives, we think multiple things can be true at the same time. So the administration's talked about the virtue of tariffs as a negotiating tactic. They've also floated the idea of a tiered framework for global trading partners. Think of it as a ranking system based on trade deficits, non tariff barriers, VAT levels, and any other characteristics that they think are important for the bilateral trade relationship. A lot of this is similar to the rhetoric we saw ahead of the April 2nd "Liberation Day" tariffs.
Ariana Salvatore: Right, and…
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How AI Could Transform the Real Estate Sector
1 juli 2025 · 6 min
Ron Kamdem, our U.S. Real Estate Investment Trusts & Commercial Real Estate Analyst, discusses how GenAI could save the real estate industry $34 billion and where the savings are most likely to be found. Lees meer
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Welcome to Thoughts on the Market. I’m Ron Kamdem, Head of Morgan Stanley’s U.S. Real Estate Investment Trusts and Commercial Real Estate research. Today I’ll talk about the ways GenAI is disrupting the real estate industry.
It’s Tuesday, July 1st, at 10am in New York.
What if the future of real estate isn’t about location, location, location – but automation, automation, automation?
While it may be too soon to say exactly how AI will affect demand for real estate, what we can say is that it is transforming the business of real estate, namely by making operations more efficient. If you’re a customer dealing with a real estate company, you can now expect to interact with virtual leasing assistants. And when it comes to drafting your lease documents, AI can help you do this in minutes rather than hours – or even days.
In fact, our recent work suggests that GenAI could automate nearly 40 percent of tasks across half a million occupations in the real estate investment trusts industry – or REITs. Indeed, across 162 public REITs and commercial real estate services companies or CRE with $92 billion of total labor costs, the financial impact may be $34 billion, or over 15 percent of operating cash flow. Our proprietary job posting database suggests the top four occupations with automation potential are management – so think about middle management – sales, office and administrative support, and installation maintenance and repairs.
Certain sub-sectors within REITs and CRE services stand to gain more than others. For instance, lodging and resorts, along with brokers and services, and healthcare REITs could see more than 15 percent improvement in operating cash flow due to labor automation. On the other h…
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The U.S. Housing Market Slowdown
30 juni 2025 · 8 min
The U.S. housing market appears to be stuck. Our co-heads of Securitized Product research, Jay Bacow and James Egan, explain how supply and demand, as well as mortgage rates, play a role in the cooling market. Lees meer
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James Egan: Welcome to Thoughts on the Market. I'm Jim Egan, co-head of Securitized Products Research at Morgan Stanley.
Jay Bacow: And I'm Jay Bacow, the other co-head of Securitized Products Research at Morgan Stanley. And after getting through last week's blistering hot temperatures, today we're going to talk about what may be a cooling housing market.
It's Monday, June 30th at 2:30pm in New York.
Now, Jim, home prices. We just got another index. They set another record high, but the pace of growth – the acceleration as a physicist in me wants to say – appears to be slowing. What's going on here?
James Egan: The pace of home price growth reported this month was 2.7 percent. That is the lowest that it's been since August of 2023. And in our view, the reason's pretty simple. Supply is increasing, while demand has stalled.
Jay Bacow: But Jim, this was a report for the spring selling season. I know we got it in June, but this is supposed to be the busiest time of the year. People are happy to go around. They're looking at moving over the summer when the kids aren't in school. We should be expecting the supply to increase. Are you saying that it's happening more than it's anticipated?
James Egan: That is what we're saying. Now, we should be expecting inventories today to be higher than they were in, call it January or February. That's exactly the seasonality that you're referring to. But it's the year-over-year growth we're paying attention to here. Homes listed for sale are up year-over-year, 18 months in a row. And that pace, it's been accelerating. Over the past 40 years, the pace of growth from this past month was only eclipsed one time, the Great Financial Crisis.
Jay Bacow: [sighs] I…
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Watching the Canary in the Coalmine
27 juni 2025 · 4 min
Stock tickers may not immediately price in uncertainty during times of geopolitical volatility. Our Head of Corporate Credit Research Andrew Sheets suggests a different indicator to watch. 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 I'm going to talk about how we're trying to simplify the complicated questions of recent geopolitical events.
It's Friday, June 27th at 2pm in London.
Recent U.S. airstrikes against Iran and the ongoing conflict between Iran and Israel have dominated the headlines. The situation is complicated, uncertain, and ever changing. From the time that this episode is recorded to when you listen to it, conditions may very well have changed again.
Geopolitical events such as this one often have a serious human, social and financial cost, but they do not consistently have an impact on markets. As analysis by my colleague, Michael Wilson and his team have shown, over a number of key geopolitical events over the last 30 years, the impact on the S&P 500 has often been either fleeting or somewhat non-existent. Other factors, in short, dominate markets.
So how to deal with this conundrum? How to take current events seriously while respecting that historical precedent that they often can have more limited market impact? How to make a forecast when quite simply few investors feel like they have an edge in predicting where these events will go next?
In our view, the best way to simplify the market's response is to watch oil prices. Oil remains an important input to the world economy, where changes in price are felt quickly by businesses and consumers.
So when we look back at past geopolitical events that did move markets in a more sustained way, a large increase in oil prices often meaning a rise of more than 75 percent year-over-year was often part of the story. Such a rise in such an important econom…
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Why the Fed Will Cut Late, But Cut More
26 juni 2025 · 11 min
Our Global Head of Macro Strategy Matt Hornbach and U.S. Economist Michael Gapen assess the Fed’s path forward in light of inflation and a weaker economy, and the likely market outcomes. Lees meer
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Matt 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.
Matt Hornbach: Today we're discussing the outcome of the June Federal Open Market Committee meeting and our expectations for rates, inflation, and the U.S. dollar from here.
It's Thursday, June 26th at 10am in New York.
Matt Hornbach: Mike, the Federal Reserve decided to hold the federal funds rate steady, remaining within its target range of 4.25 to 4.5 percent. It still anticipates two rate cuts by the end of 2025; but participants adjusted their projections further out suggesting fewer cuts in 2026 and 2027.
You, on the other hand, continue to think the Fed will stay on hold for the rest of this year, with a lot of cuts to follow in 2026. What specifically is behind your view, and are there any underappreciated dynamics here?
Michael Gapen: So, we've been highlighting three reasons why we think the Fed will cut late but cut more. The first is tariffs introduce differential timing effects on the economy. They tend to push inflation higher in the near term and they weaken consumer spending with a lag. If tariffs act as a tax on consumption, that tax is applied by pushing prices higher – and then only subsequently do consumers spend less because they have less real income to spend. So, we think the Fed will be seeing more inflation first before it sees the weaker labor market later.
The second part of our story is immigration. Immigration controls mean it's likely to be much harder to push the unemployment rate higher. That's because when we go from about 3 million immigrants per year down to about 300,000 – that means much lower gro…
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Humanoids’ Insatiable Hunger for Minerals
25 juni 2025 · 4 min
Our Australia Materials Analyst Rahul Anand discusses why critical minerals may be the Achilles’ heel of humanoids as demand significantly outpaces supply amid geopolitical uncertainties. Lees meer
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Rahul Anand: Welcome to Thoughts on the Market. I'm Rahul Anand, Head of Morgan Stanley’s Australia Materials Research team.
Today, I'll dig deeper into one of the vital necessities for the development of robotics – critical minerals – and why they're so vital to be front of mind for the Western world today.
It's Wednesday, June 25th at 8am in Sydney, Australia.
Humanoid robots will soon become an integral part of our daily lives. A few weeks ago, you heard my colleagues Adam Jonas and Sheng Zhong discuss how humanoids are going to transform the economy and markets. Morgan Stanley Research expects this market to reach more than a billion units by 2050 and generate almost [$] 5 trillion in annual revenue.
When we think about that market, and we think about what it could do for critical minerals demand, that could skyrocket. And the key areas of critical minerals demand would basically be focused on rare earths, lithium and graphite.
Each one of these complex machines is going to require about a kilo of rare earths, 2 kgs of lithium, 6.5 kgs kilos of copper, 1.5 kgs of nickel, 3 kgs of graphite, and about 200 grams of cobalt. Importantly, this market from a cumulative standpoint by the year 2050, could be to the tune of about $800 billion U.S., which is staggering.
And beyond that market size of $800 billion U.S., I think it's important to drill a bit deeper – because if we now consider how these markets are dominated currently, comes the China angle. And China currently dominates 88 percent of rare earth supply, 93 percent of graphite supply and 75 percent of refined lithium supply. China recently placed controls on seven heavy rare earths and permanent magnet exports in response to tariff announcements that we…
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India Outperforms with High Growth and Low Volatility
24 juni 2025 · 4 min
Morgan Stanley’s Chief Asia Equity Strategist Jonathan Garner explains why Indian equities are our most preferred market in Asia. Lees meer
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Welcome to Thoughts on the Market. I’m Jonathan Garner, Morgan Stanley’s Chief Asia Equity Strategist. Today I’ll discuss why we remain positive on India’s long-term equity story.
It’s Tuesday, the 24th of June at 9am in Singapore.
We’ve had a long-standing bullish outlook on the India economy and its stock market. In the last five years MSCI India has delivered a total return in U.S. dollars of 145 percent versus 94 percent for global equities and just 39 percent for emerging markets. Indian equities are our most preferred market within Asia for three key reasons. First, India’s superior economic and earnings growth. Second, lower exposure to trade tariffs. And third, a strong domestic investor base. And all of this adds up to structural outperformance not just in Asia but indeed globally, and with significantly lower volatility than peer group markets.
So let’s dive deeper. To start with – the macroeconomic backdrop. We expect India to account for 20 percent of overall incremental global GDP growth in the coming decade. Manufacturing competitiveness is improving thanks to bolstered infrastructure in power, ports, roads, freight transport systems as well as investments in social infrastructure such as water, sewage and hospitals.
Additionally, India's growing middle class offers market opportunities to companies across many product categories. There’s robust domestic consumption, a strong investment cycle led by public and private capital expenditure and continuing structural reforms, including in the legal sphere. GDP growth in the first quarter was more than 7 percent and our team expects over 6 percent in the medium term, which would be by far the highest of the major economies.
Furthermore, we continue to expect robust corporate earnings growth. Since the end of …
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Why Stocks Can Be Resilient Despite Geopolitical Risk
24 juni 2025 · 4 min
Our CIO and Chief U.S. Equity Strategist Mike Wilson explains why investors have largely remained calm amid recent developments in the Middle East. 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 how to think about the tensions in the Middle East for U.S. equities.
It's Monday, June 23rd at 11:30am in New York.
So, let’s get after it.
Over the weekend, the United States executed a surprise attack on Iran’s nuclear enrichment facilities. While the extent of the damage has yet to be confirmed, President Trump has indicated Iran’s nuclear weapon development efforts have been diminished substantially, if not fully. If true, then this could be viewed as a peak rate of change for this risk. In many ways this fits our overall narrative for U.S. equities that we have likely passed the worst for many risks that were weighing on stocks in the first quarter of the year. Things like immigration enforcement, fiscal spending cuts, tariffs and AI CapEx deceleration all contributed to dragging down earnings forecasts.
Fast forward to today and all of these items have peaked in terms of their negative impact, and earnings forecasts have rebounded since Mid-April. In fact, the rebound in earnings revision breadth is one of the sharpest on record and provides a fundamental reason for why U.S. stocks have been so strong since bottoming the week of April 7th. Add in the events of this past weekend and it makes sense why equities are not selling off this morning as many might have expected.
For further context, we looked at 23 major geopolitical events since 1950 and the impact on stock prices. What we found may surprise listeners, but it is a well understood fact by seasoned investors. Geopolitical shocks are typically followed by higher, not lower equity prices, especially over 6 to12 months. Only five of the 23 outco…
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Midyear Credit Outlook: An Odd Disconnect in Asia
20 juni 2025 · 9 min
Our analysts Andrew Sheets and Kelvin Pang explain why international issuers may be interested in so-called ‘dim sum’ bonds, despite Asia’s growth drag. 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.
Kelvin Pang: And I'm Kelvin Pang, Head of Asia Credit Strategy.
Andrew Sheets: And today in the program we're going to finish our global tour of credit markets with a discussion of Asia.
It's Friday, June 20th at 2pm in London.
Kelvin Pang: And 9pm in Hong Kong.
Andrew Sheets: Kelvin, thank you for joining us. Thank you especially for joining us so late in your day – to complete this credit World tour. And before we get into the Asia credit market, I think it would just be helpful to frame at a very high level – how you see the economic picture in the region.
Kelvin Pang: We do think that the talks and potential deals will probably provide some reprieve towards the growth for the region, but not a big relief. We do think that tariff uncertainty will linger here, and it will keep growth low here; especially if we do think that CapEx of the region will be weaker due to tariff uncertainty. A weaker U.S. dollar, for example, plus monetary easing will help offset some of this growth drag. But overall, we do think that the Asia region could see 90 basis point down in real GDP growth from last year.
Andrew Sheets: So, we've got weaker growth in Asia as a function of high tariffs and high tariff uncertainty that can't be offset by further policy easing. In the context of that weaker growth backdrop, higher uncertainty – are credit spreads in the region wide?
Kelvin Pang: No, they're actually really low. They're probably at like the lowest since we start having a data in 2013. So definitely like a 12 to 13 year low of the range.
Andrew Sheets: And so why is that? Why do you have this kind of seemingly odd disconnect between some r…
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How Oil Could Price Amid Mideast Tensions
18 juni 2025 · 4 min
Our Global Commodities Strategist Martijn Rats explores three possible scenarios for oil prices in light of geopolitical shifts in the Middle East. Lees meer
Important note regarding economic sanctions. This research may reference jurisdiction(s) or person(s) which are the subject of sanctions administered or enforced by the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”), the United Kingdom, the European Union and/or by other countries and multi-national bodies. Any references in this report to jurisdictions, persons (individuals or entities), debt or equity instruments, or projects that may be covered by such sanctions are strictly incidental to general coverage of the relevant economic sector as germane to its overall financial outlook, and should not be read as recommending or advising as to any investment activities in relation to such jurisdictions, persons, instruments, or projects. Users of this report are solely responsible for ensuring that their investment activities are carried out in compliance with applicable sanctions.
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----- Transcript -----
Martijn Rats: Welcome to Thoughts on the Market. I'm Martin Rats, Morgan Stanley's Global Commodity Strategist.
Today I'll talk about oil price dynamics amidst escalating tensions between Israel and Iran.
It's Wednesday, June 18th at 3pm in London.
Industry watchers with an eye on the Brent Forward Curve recently noticed a rare smile shape: downward sloping in the first couple of months, but then an upward sloping curve later this year, and into 2026. Now that changed last Friday.
The oil market creates these various shapes in the Forward Curve, depending on how it sees the supply demand balance. When the forward curve is downward sloping, holding inventory really is quite unattractive; so typically, operators release barrels from storage under those conditions. The market creates that structure when the conditions are tight, and barrels indeed nee…
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Why Markets Should Keep an Eye on Japan’s AI Playbook
17 juni 2025 · 5 min
Our Senior Japan Economics Advisor discusses Japan’s systematic approach to AI and the lessons it offers for other markets. Lees meer
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Welcome to Thoughts on the Market. I’m Robert Feldman, Senior Advisor at Morgan Stanley MUFG Securities in Tokyo. Today I’d like to discuss Japan’s crucial contributions in global AI development.
It’s Tuesday, June 17, at 2 PM in Tokyo.
Japan has always been a world leader in advanced technology infrastructure and robotics. So it comes as no surprise that Japanese devices and materials play critical roles in the global AI supply chain. For investors, however, it's vital to understand Japan's unique systematic approach to AI and the lessons it offers other countries.
In Japan, AI has historically developed through this symbiotic interaction of four elements: Hardware, Software, Data, and Ethics. Japanese technology advances not only evolve, but they co-evolve – meaning that advances in one element make advances in others more urgent. And when those latter advances occur, chokepoints arise in yet other elements. However, unlike co-evolution in nature, where chance mutations just happen to reinforce each other, co-evolution in AI is driven by human intent. That is, humans see a chokepoint and address it with innovation.
These chokepoints – or bottlenecks in development – they’re crucial to the way we think about AI. Identifying the chokepoints allows firms and industries to innovate. And Investors should also pay particular attention to these chokepoints because that’s where the investment opportunities are.
For example, at a recent event, we asked a medium-sized Japanese retail food manufacturing company president – who is an energetic AI advocate – which factor was the biggest chokepoint for his firm. And he replied unequivocally, immediately, “Data.” His firm has some data; so do his competitors. But there is no common protocol for recording the data, contributing informati…
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A Bullish Case for Large Cap U.S. Equities
16 juni 2025 · 5 min
While market sentiment on U.S. large caps turns cautious, our Chief CIO and U.S. Equity Strategist Mike Wilson explains why there's still room to stay constructive. 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 remain more constructive than the consensus on large cap U.S. equities – and which sectors in particular.
It's Monday, June 16th at 9:30am in New York.
So, let’s get after it.
We remain more constructive on U.S. equities than the consensus mainly because key gauges we follow are pointing to a stronger earnings backdrop than others expect over the next 12 months. First, our main earnings model is showing high-single-digit Earnings Per Share growth over the next year. Second, earnings revision breadth is inflecting sharply higher from -25 percent in mid-April to -9 percent today. Third, we have a secondary Earnings Leading model that takes into account the cost side of the equation; and that one is forecasting mid-teens Earnings Per Share growth by the first half of 2026. More specifically, it’s pointing to higher profitability due to cost efficiencies.
Interestingly, this was something we heard frequently last week at the Morgan Stanley Financials Conference with many companies highlighting the adoption of Artificial Intelligence to help streamline operations. Finally, the most underappreciated tailwind for S&P 500 earnings remains the weaker dollar which is down 11 percent from the January highs. As a reminder, our currency strategists expect another 7 percent downside over the next 12 months.
The combination of a stronger level of earnings revisions breadth and a robust rate of change on earnings revisions breadth since growth expectations troughed in mid-April is a powerful tailwind for many large cap stocks, with the strongest impact in the Capital Goods and Software industries.…
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The Economic Stakes of President Trump’s Immigration Policy
13 juni 2025 · 11 min
Our economists Michael Gapen and Sam Coffin discuss how a drop in immigration is tightening labor markets, and what that means for the U.S. economic outlook and Fed policy. Lees meer
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----- Transcript -----
Michael Gapen: Welcome to Thoughts on the Market. I'm Michael Gapen, Morgan Stanley's Chief U.S. Economist.
Sam Coffin: And I'm Sam Coffin, Senior Economist on our U.S. Economics research team.
Michael Gapen: Today we're going to have a discussion about the potential economic consequences of the administration’s shift in immigration policies. In particular, we’ll focus much of our attention on the influence that immigration reform is having on the U.S. labor market. And what it means for our outlook on Federal Reserve policy.
It's Friday, June 13th at 9am in New York.
So, Sam, news headlines have been dominated by developments in the President's immigration policies; what is being called by, at least some commentators, as a toughening in his stance.
But I'd like to set the stage first with any new information that you think we've received on border encounters and interior removals. The administration has released new data on that recently that covered at least some of the activity earlier this year. What did it tell you? And did it differ markedly from your expectations?
Sam Coffin: What we saw at first was border encounters falling sharply to 30,000 a month from 200,000 or 300,000 a month last year. It was perhaps a surprise that they fell that sharply. And on the flip side, interior removals turned out to be much more difficult than the administration had suggested. They'd been targeting maybe 500,000 per year in removals, 1500 a day. And we're hitting a third or a half of that pace.
Michael Gapen: So maybe the recent escalation in ICE raids could be in response to this, right? The fact that interior removals have not been as large as some in the administration would desire.
Sam Coffin: That's correct. And we think those…
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Midyear Credit Outlook: Slowdown in Europe
12 juni 2025 · 10 min
Our analysts Andrew Sheets and Aron Becker explain why European credit markets’ performance for the rest of 2025 could be tied to U.S. growth. 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.
Aron Becker: And I'm Aron Becker, Head of European Credit Strategy.
Andrew Sheets: And today on the program, we're continuing a series of conversations covering the outlook for credit around the world. Morgan Stanley has recently updated its forecast for the next 12 months, and here we're going to bring you the latest views on what matters for European credit.
It's Thursday, June 12th at 2pm in London.
So, Aron, it's great to have this conversation with you. Today we're going to be talking about the European credit outlook. We talked with our colleague Vishwas in the other week about the U.S. credit outlook. But let's really dive into Europe and how that looks from the perspective of a credit investor.
And maybe the place to start is, from your perspective, how do you see the economic backdrop in Europe, and what do you think that means for credit?
Aron Becker: Right. So, on the European side, our growth expectations remain somewhat more challenging. Our economists are expecting growth after a fairly strong start to slow down in the back half of this year. The German fiscal package that was announced earlier this year will take time to lift growth further out in 2026. So, in the near term, we see a softening backdrop for the domestic economy.
But I think what's important to emphasize here is that U.S. growth, as Vishwas and you have talked about last time around, is also set to decelerate on our economists forecast more meaningfully. And that matters for Europe.
Two reasons why I think the U.S. growth outlook matters for European credit. One, nearly a quarter of European companies’ revenues are generated in the U.S. And two, U.S. co…
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What the New Tax Bill Means for Cross-Border Portfolios
11 juni 2025 · 3 min
Our Global Head of Fixed Income Research and Public Policy Strategy Michael Zezas reads the fine print of U.S. tax legislation to understand how it might affect foreign companies operating in the U.S. and foreign investors holding U.S. debt. 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 a proposal tucked away in U.S. tax legislation that could impact investors in meaningful ways: Section 899.
It’s Wednesday, June 11th, at 12 pm in New York.
So, Section 899 is basically a new rule that's part of a bigger bill that passed the House. It would give the U.S. Treasury the power to hit back with taxes on foreign companies if they think other countries are unfairly taxing U.S. businesses. And this rule could override existing tax agreements between countries, even applying to government funds and pension plans.
The immediate concern is whether foreign holdings of U.S. bonds would be taxed – something that’s not entirely clear in the draft language. Making the costs of ownership higher would affect holders of tens of trillions of U.S. securities. That includes about 25 percent of the U.S. corporate bond market. In short, the concern is that this would disincentivize ownership of U.S. bonds by overseas investors, creating extra costs or risk premium – meaning higher yields.
The good news is that there's a decent chance the Senate will tweak or clarify Section 899. Consider the evidence that the motive of those who drafted this provision doesn’t seem to have been to tax fixed income securities. If it was, you’d expect the official estimates of how much tax revenue this provision would generate to be far higher than what was scored by Congress. Public comments by Senators seem to mirror this, signaling changes are coming.
But while that might mitigate one acute risk associated with 899, other risks could ling…