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How China Is Rewriting the AI Code
10 juni 2025 · 4 min
Our Head of Asia Technology Research Shawn Kim discusses China's distinctly different approach to AI development and its investment implications. Lees meer
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Welcome to Thoughts on the Market. I’m Shawn Kim, Head of Morgan Stanley’s Asia Technology Team. Today: a behind-the-scenes look at how China is reshaping the global AI landscape.
It’s Tuesday, June 10 at 2pm in Hong Kong.
China has been quietly and methodically executing on its top-down strategy to establish its domestic AI capabilities ever since 2017. And while U.S. semiconductor restrictions have presented a near-term challenge, they have also forced China to achieve significant advancements in AI with less hardware. So rather than building the most powerful AI capabilities, China’s primary focus has been on bringing AI to market with maximum efficiency. And you can see this with the recent launch of DeepSeek R1, and there are literally hundreds of AI start-ups using open-source Large Language Models to carve out niches and moats in this AI landscape.
The key question is: What is the path forward? Can China sustain this momentum and translate its research prowess into global AI leadership? The answer hinges on four things: its energy, its data, talent, and computing. China’s centralized government – with more than a billion mobile internet users – possess enormous amounts of data. China also has access to abundant energy: it built 10 nuclear power plants just last year, and there are ten more coming this year. U.S. chips are far better for the moment, but China is also advancing quickly; and getting a lot done without the best chips. Finally, China has plenty of talent – according to the World Economic Forum, 47 percent of the world’s top AI researchers are now in China.
Plus, there is already a comprehensive AI governance framework in place, with more than 250 regulatory standards ensuring that AI development remains secure, ethical, and strategica…
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U.S. Financials Conference: Three Key Themes to Watch
9 juni 2025 · 10 min
Our analysts Betsy Graseck, Manan Gosalia and Ryan Kenny discuss the major discussions they expect to highlight Morgan Stanley’s upcoming U.S. Financials conference. Lees meer
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Betsy Graseck: Welcome to Thoughts on the Market. I'm Betsy Graseck, Morgan Stanley's U.S. Large Cap Bank Analyst and Morgan Stanley's Global Head of Banks and Diversified Finance Research.
Today we take a look at the key debates in the U.S. financials industry.
It’s Monday, June 9th at 10:30am in New York.
Tomorrow Morgan Stanley kicks off its annual U.S. Financials Conference right here in New York City. We wanted to give you a glimpse into some of the most significant themes that we expect will be addressed at the conference. And so, I'm here with two of my colleagues, Manan Gosalia, U.S. Midcap Banks Analyst, and Ryan Kenny, U.S. Midcaps Advisor Analyst.
Investors are grappling with navigating economic uncertainty from new tariff policies, inflation concerns, and immigration challenges – all of which impacts financial growth and credit quality. On the positive side, they are also looking closely at regulatory shifts under the Trump administration, which could ease banking rules for the first time since the Great Financial Crisis.
Let's hear what our experts are expecting. Manan, ahead of the conference, what key themes do you expect mid-cap banks will highlight?
Manan Gosalia: So, there are three key themes that we've been focused on for the mid-cap banks: loan growth, net interest margins, and capital. So, first on loan growth. Loan growth for the regional banks has been fairly tepid at about 2 to 3 percent year-on-year, and the tone from bank management teams has been fairly mixed in the April earning season that followed the tariff announcements on April 2nd.
Some banks were starting to see the uncertainty weigh on corporate decision making and borrowing activity, while others were only seeing a slow down in some parts of t…
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Standing by Our Outlook
6 juni 2025 · 9 min
Morgan Stanley’s midyear outlook defied the conventional view in a number of ways. Our analysts Serena Tang and Vishy Tirupattur push back on the pushback to their conclusions, explaining the thought process behind their research. Lees meer
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Serena Tang: Welcome to Thoughts on the Market. I'm Serena Tang, Morgan Stanley's Chief Cross-Asset Strategist
Vishy Tirupattur: And I'm Vishy Tirupattur, Morgan Stanley's Chief Fixed Income Strategist.
Serena Tang: Today's topic, pushback to our outlook.
It's Friday, June 6th at 10am in New York.
Morgan Stanley Research published our mid-year outlook about two weeks ago, a collaborative effort across the department, bringing together our economist views with our strategist high conviction ideas. Right now, we're recommending investors to be overweight in U.S. equities, overweight in core fixed income like U.S. treasuries, like U.S. IG corporate credit. But some of our views are out of consensus.
So, I want to talk to you, Vishy, about pushback that you've been getting and how we pushback on the pushback.
Vishy Tirupattur: Right. So, the biggest pushback I've gotten is a bit of a dissonance between our economics narrative and our markets narrative. Our economics narrative, as you know, calls for a significant weakening of economic growth. From about – for the U.S. – 2.5 percent growth in 2024 goes into 1 percent in 2025 and in 2026. And Fed doesn't cut rates in 2025, and cuts seven times in 2026.
And if you look at a somewhat uninspiring outlook for the U.S. economy from our economists – reconciling an uninspiring economic outlook on the U.S. economy with the constructive view we have on U.S. assets, equities, credit, treasuries – that's been a source of contention.
So how do we reconcile this? So, my pushback to the pushback is the following; that they are different plot lines across different asset classes. So, our economists have slowing of the economy – but not …
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5 Reasons the Obesity Drug Market Remains Strong
5 juni 2025 · 4 min
The global market for obesity drugs is expanding. Our U.S. Pharma and Biotech Analyst Terrence Flynn discusses what’s driving the next stage of global growth for GLP-1 medicines. Lees meer
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Terrence Flynn: Welcome to Thoughts on the Market. I'm Terrence Flynn, Morgan Stanley's U.S. Pharma and Biotech Analyst. The market for obesity medicines is at an inflection point, and today I'll focus on what's driving the next stage of global growth.
It's Thursday, June 5th at 2pm in New York.
GLP-1 medicines have been viewed by many stakeholders as one of the most transformative medications in the market today. They've exploded in popularity over the last few years and become game changers for many people who take them. These drugs have large cap biopharma companies racing to innovate. They've had ripple effects on food, fitness, and fashion. They truly are a major market force. And now we're on the cusp of a significant broadening of use of these medicines.
Currently the U.S. is the largest consumer in the world of GLP-1s. But new versions of these medicines suggest that this market will extend beyond the U.S. to significantly larger numbers of patients globally. On our estimate, the Total Addressable Market or TAM for obesity medications should reach $150 billion globally by 2035, with approximately [$]80 billion from the U.S. and [$]70 billion from international markets.
Now this marks a meaningful increase from our 2024 forecast of [$]105 billion and reflects a greater appreciation of opportunities outside of the U.S. We think obesity drug adoption will likely accelerate as patients and providers become more familiar with the new products and as manufacturers address hurdles in production, distribution, and access.
Current adoption rates of GLP-1 treatments within the eligible obesity population are about 2 to 3 percent. This is in the U.S., and roughly 1 percent in the rest of the world. Now, when we look out fu…
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Midyear U.S. Credit Outlook: Why Investors Should Be Selective
4 juni 2025 · 7 min
Our analysts Andrew Sheets and Vishwas Patkar take stock of the U.S. credit market, noting which segments are on firm footing going into a period of slower growth. 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.
Vishwas Patkar: And I'm Vishwas Patkar, Head of U.S. Credit Strategy at Morgan Stanley.
Andrew Sheets: Today on the program, we're going to have the first in a series of conversations covering our outlook for credit around the world.
It's Wednesday, June 4th at 2pm in London.
Vishwas Patkar: And 9am in New York.
Andrew Sheets: Vishwas, along with many of our colleagues at Morgan Stanley, we recently updated our 12-month outlook for credit markets around the world. Focusing on your specialty, the U.S., how do you read the economic backdrop and what do you think it means for credit at a high level?
Vishwas Patkar: So, our central scenario of slowing growth, somewhat firm inflation and no rate cuts from the Fed until the first quarter of 2026 – when I put all of that together, I view that as somewhat mixed for credit. It's good for certain segments of the market, not as good for others.
I think the positive on the one side is that with the recent de-escalation in trade tensions, recession risks have gone lower. And that's reflected in our economists' view as well. I think for an asset class like credit, avoiding that drill downside tail I think is important. The other positive in the market today is that the level of all in yields you can get across the credit spectrum is very compelling on many different measures.
The negative is that we are still looking at a fair bit of slowing in economic activity, and that's a big downshift from what we've been used to in the past few years. So, I would say we're certainly not in the Goldilocks environment that we saw for credit through the second half of last year. And it's i…
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U.S. Shoppers Take Stock
3 juni 2025 · 9 min
Our Thematics and U.S. Economics analysts Michelle Weaver and Arunima Sinha discuss how American consumers are planning to spend as they consider tariffs, inflation and potential new tax policies. Lees meer
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Michelle Weaver: Welcome to Thoughts on the Market. I'm Michelle Weaver, U.S. Thematic and Equity strategist.
Arunima Sinha: And I'm Arunima Sinha from the Global and U.S. Economics Teams.
Michelle Weaver: Today – an encouraging update on the U.S. consumer.
It's Tuesday, June 3rd at 10am in New York.
Arunima, the last couple of months have been challenging not only for global markets, but also for everyday people and for individual households; and we heard pretty mixed information on the consumer throughout earning season. Quite a few different companies highlighted consumers being more choiceful, being more value oriented. All this to say is we're getting a little bit of a mixed message.
In your opinion, how healthy is the U.S. consumer right now?
Arunima Sinha: So, Michelle, I'm glad we're starting with the sort of up upbeat part of the consumer. The macro data on the consumer has been holding up pretty well so far. In the first quarter of [20]25, consumer spending has actually been running at a similar pace as the first quarter of [20]24. Nominal consumption spending grew 5.5 percent on a year-on-year basis. Goods were up almost 4 percent. Services were up more than 6 percent.
So, all of that was good. What our takeaway was that we had a lot of strength in good spending, and that did probably reflect some of the pull forward on the back of tariff news. But that pace of growth suggests that there is an aggregate consumer. They have healthy balance sheets, and they're willing to spend.
And then what's driving that consumption growth from our point of view. We think that labor market compensation has been running at a pretty steady pace so far. So more than 5.5 percent quarterly analyzed. PCE inflat…
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Why Equity Markets May Be Stronger Than You Think
2 juni 2025 · 5 min
Our CIO and Chief U.S. Equity Strategist Mike Wilson explains how his outlook on earnings and valuations give him a constructive view on U.S. equities for the next 12 months. Lees meer
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----- Transcript -----
Mike Wilson: Welcome to Thoughts on the Market. I'm Mike Wilson, Morgan Stanley’s CIO and Chief U.S. Equity Strategist.
Today on the podcast I’ll discuss where there is the most push back to our Mid-year outlook and why I remain convicted in our generally constructive view on U.S. equities for the next 12 months.
It's Monday, June 2nd at 11:30am in New York.
So, let’s get after it.
To briefly summarize our outlook, we have maintained our 6500 12-month price target for the S&P 500 this year despite what has been a very volatile first five months – both in terms of news flow and price action. Part of the reason we didn’t change this view stems from the fact that we expected the first half to be challenging for U.S. stocks but to be followed by a more favorable second half. Much of this was related to our view that the new administration would pursue the growth negative part of their policy agenda first. This played out -- with their focus on immigration enforcement, spending cutbacks and tariffs. In addition to these policy adjustments, we also expected AI capex to decelerate in the first half after such fast growth last year. All of these factors conspired to weigh on both economic growth and earnings revisions.
Second, the way in which tariffs were rolled out on Liberation Day was a shock to most market participants, including us, and served as the perfect catalyst for what can only be described as capitulation selling by many institutional investors. That capitulation has set the stage for the very reflexive snap back in equity prices that is also supported by a positive rate of change on policy, earnings revisions breadth, financial conditions and a weaker U.S. dollar.
The main push back to our views centers on our const…
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Why Interest Rates Matter Again
30 mei 2025 · 4 min
Our Head of Corporate Credit Research explains why the legal confusion over U.S. tariffs plus the pending U.S. budget bill equals a revived focus on interest rates for investors. 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 revisit a theme that was topical in January and has become so again. How much of a problem are higher interest rates?
It's Friday, May 30th at 2pm in London.
If it wasn't so serious, it might be a little funny. This year, markets fell quickly as the U.S. imposed tariffs. And then markets rose quickly as many of those same tariffs were paused or reversed. So, what's next?
Many tariffs are technically just paused and so are scheduled to resume; and overall tariff rates, even after recent reductions towards China, are still historically high. The economic data that would really reflect the impact of recent events, well, it simply hasn't been reported yet. In short, there is still significant uncertainty around the near-term path for U.S. growth. But for all of our tariff weary listeners, let's pretend for a moment that tariffs are now on the back burner. And if that's the case, interest rates are coming back into focus.
First, lower tariffs could mean stronger growth and thus higher interest rates, all else equal. But also importantly, current budget proposals in the U.S. Congress significantly increase government borrowing, which could also raise interest rates. If current proposals were to become permanent. for example, they could add an additional [$]15 trillion to the national debt over the next 30 years, over and above what was expected to happen per analysis from Yale University.
Recall that prior to tariffs dominating the market conversation, it was this issue of interest rates and government borrowing that had the market's attention in January. And then, as today, it's this 3…
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What Now with Tariffs?
30 mei 2025 · 9 min
After the federal court’s ruling against Trump’s reciprocal tariffs, and an appeals court’s temporary stay of that ruling, our analysts Michael Zezas and Michael Gapen discuss how the administration could retain the tariffs and what this means for the U.S. economy. Lees meer
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----- Transcript -----
Michael Zezas: Welcome to the Thoughts on the Market. I'm Michael Zezas, Morgan Stanley's Global Head of Fixed Income Research and Public Policy Strategy.
Michael Gapen: And I'm Michael Gapen, Chief U.S. Economist.
Today, the latest on President Trump's tariffs.
It's Thursday, May 29th at 5pm in New York.
So, Mike, on Wednesday night, the U.S. Court of International Trade struck down President Trump's reciprocal tariffs. This ruling certainly seems like a fresh roadblock for the administration.
Michael Zezas: Yeah, that's right. But a quick word of caution. That doesn't mean we're supposed to conclude that the recent tariff hikes are a thing of the past. I think investors need to be aware that there's many plausible paths to keeping these tariffs exactly where they are right now.
Michael Zezas: First, while the administration is appealing this decision, the tariffs can stay in place. But even if courts ultimately rule against the Trump administration, there are other types of legal authorities that they can bring to bear to make sure that the tariff levels that are currently applied endure. So, what the court said the administration had done improperly was levy tariffs under the International Emergency Economic Powers Act (IEEPA).
And there's been active debate all along amongst legal scholars about if this was the right law to justify those tariff levies. And so, there's always the possibility of court challenges. But what the administration could do, if the courts continue to uphold the lower court's ruling, is basically leverage other legal authorities to continue these tariffs.
They could use Section 122 as a temporary authorit…
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How to Decode Tariff Signals
28 mei 2025 · 4 min
Our Global Head of Fixed Income Research & Public Policy Strategy, Michael Zezas, shares the answers to clients’ top U.S. policy questions from Morgan Stanley’s Japan Investor Summit. Lees meer
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----- Transcript -----
Michael Zezas: Welcome to Thoughts on the Market. I’m Michael Zezas, Morgan Stanley’s Global Head of Fixed Income Research & Public Policy Strategy. Today, takeaways from our Japan Investor Summit.
It’s Wednesday, May 28th at 10:30am in New York.
Last week, I attended our Japan Investor Summit in Tokyo: Two full days of panels on key investment themes and one-on-one meetings with clients from all parts of the Morgan Stanley franchise. During the meeting, Morgan Stanley Research launched its mid year economics and market strategy outlooks. So needless to say there was a healthy dialogue on investment strategy over those 48 hours. And I want to share what were the most frequent questions I received and, of course, our answers to those questions.
As you could guess, U.S. tariff policy was a key focus. Could tariffs re-escalate? Or was the worst behind us; and if so, could investors set aside their concerns about the U.S. economy? It’s a complicated issue so accordingly our answer is nuanced. On the one hand, the current state of play is mostly aligned where we thought tariff policy would be by end of year. It’s just arrived much earlier. Higher overall U.S. tariffs with a skew toward higher tariffs on China relative to the rest of world, as the U.S. has less common ground with them and thus greater challenges in reaching a trade agreement with China in a timely manner. So that might imply we’ve arrived at the end point. But we think that’s too simple of a way for investors to think about it.
First there’s plenty of potential for escalation from current levels as part of ongoing negotiations. And even if it’s only temporary it could affect markets. Second, and perhaps more importantly, even though the U.S. cutting tarif…
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Luxury Sector Tightens Its Belt
27 mei 2025 · 10 min
Live from the Morgan Stanley Luxury Conference in Paris, our analysts Arunima Sinha and Eduoard Aubin discuss the economic and consumer trends shaping demand for luxury goods. Lees meer
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----- Transcript -----
Arunima Sinha: Welcome to Thoughts on the Market. I'm Arunima Sinha from Morgan Stanley's Global and U.S. Economics teams.
Eduoard Aubin: And I'm Eduoard Aubin, Head of the Luxury Goods team.
Arunima Sinha: This episode was recorded last week when we were at the annual Morgan Stanley Luxury Conference in Paris. In it, we bring you an overview of what we heard from companies and investors about the hottest trends in the luxury industry.
It's Tuesday, May 27th at 8am in Paris.
For several years now, the luxury industry has been riding a post pandemic boom. And the top luxury brands experience 80 percent or greater sales growth between 2019 and [20]24. So Ed, is this trend going to continue or has it started to moderate and why?
Eduoard Aubin: No, it has already started to moderate clearly last year. So, the growth rates of some of the leading luxury good brands, you know, over the past, four or five years, was clearly double digit CAGR growth.
What we've seen in 2024 – is the market, luxury goods market worldwide has already started to contract. It was very moderate, about 2-3 percent. But it's very unusual because over the past 30 years, the market has contracted only once or twice. So, it started last year already. But we think it's going to, you know, accelerate; the decline could be even a bit more significant this year to low to mid single digit.
And there are a number as to – of reasons as to why the market has luxury goods market has moderated. First of all, there's been post-COVID; post pandemic. There's been a wallet shift away from ownership of goods to more spend on experiences such as travel, restaurants, dining out, et cetera.
The other thing is that you had a lot of, you know, closets, which were full post t…
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Midyear U.S. Outlook: Equity Markets a Step Ahead?
23 mei 2025 · 4 min
Global trade tensions have eased after a steadying in U.S. policy shifts, leading our CIO and Chief U.S. Equity Strategist Mike Wilson to make a more bullish case for the second half of 2025. 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 recent developments on tariffs and interest rates, and how it affects our 12 month view for U.S. Equities.
It's Friday, May 23rd at 9am in New York.
So, let’s get after it.
The reduction in the headline tariff rate on China from 145 percent to 30 percent extended the rally in stocks last week and should help to support both corporate and consumer confidence. More importantly, the 90-day détente came at a critical juncture, in my view, as a few more weeks of what was essentially a trade embargo would have likely led to a recession.
Equity market volatility also subsided considerably amid the decline in trade policy uncertainty. In fact, both measures peaked well before the deal with China came together and are now back below where they were pre-Liberation Day. To me, this means trade headwinds have likely peaked in rate of change terms and are unlikely to return to such levels again. This would fit with the capitulatory price action we saw in early April with the average stock in the S&P 500 experiencing a 30 percent drawdown. In short, while the lagging hard data is likely to come in softer over the next coming months, the equity market already priced it in April. In the event of a recession that still arrives, we think the April lows will still hold, assuming it's a mild one with manageable risk to credit and funding markets.
As further support for stocks, earnings revisions breadth appears to have bottomed. This indicator has leading properties in terms of the direction of earnings forecasts and is an important gauge of corporate confidence, in our view. The combi…
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Midyear Global Outlook, Pt 2: Why the U.S. Still Leads Global Markets
22 mei 2025 · 9 min
Our analysts Serena Tang and Seth Carpenter discuss Morgan Stanley’s out-of-consensus view on U.S. exceptionalism, and how investors should position their portfolios given the current market uncertainty. Lees meer
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----- Transcript -----
Seth: Welcome to Thoughts on the Market. I'm Seth Carpenter, Morgan Stanley's Global Chief Economist.
Serena: And I'm Serena Tang, Morgan Stanley's, Chief Global Cross-Asset Strategist.
Seth: Today, we're going to pick up the conversation where we left it off, talking about our mid-year outlook; but this time I get to ask Serena the questions.
It's Thursday, May 22nd at 10am in New York.
Serena, we're back for part two of this podcast. Let's jump in where we left off. We've seen a lot of policy surprise in the last six months. We've had a big sell off in the beginning of April, in part inspired by all of this uncertainty.
What are you telling clients? What do you think investors should be doing? How should they be positioning their portfolios in the current circumstances?
Serena: So, we are recommending going overweight in U.S. equities and going overweight in core fixed income like U.S. treasuries and like investment grade corporate credit. And we have a very strong preference for U.S. over rest of the world assets, except the dollar. Now I think for us, the main message is that you have global growth slowing, which is what you talked about yesterday.
But you know, risky assets can look past the low growth and do well, while treasuries can look forward to the many Fed cuts you guys are expecting in 2026 and rally. But if I look at valuations that does suggest equities and credit have completely, almost priced out, growth slowdown odds. Meaning that I think there is still some downside and we'd recommend quality across the board.
Seth: In your judgment then, looking around the world at all the different asset classes, how well, or perhaps how poorly, are those asset classes priced for the sor…
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Midyear Global Outlook, Pt 1: Skewing to the Downside
21 mei 2025 · 10 min
Our analysts Seth Carpenter and Serena Tang discuss why they believe the global economy is set to slow meaningfully in the second half of 2025. Lees meer
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----- Transcript -----
Serena: Welcome to Thoughts on the Market. I'm Serena Tang, Morgan Stanley's, Chief Global Cross-Asset Strategist.
Seth: And I'm Seth Carpenter, Morgan Stanley's Global Chief Economist.
Serena: Today we'll discuss Morgan Stanley's midyear outlook for the global economy and markets.
It's Wednesday, May 21st at 10am in New York.
Seth, you published a year ahead outlook last November. Since President Trump took office back in January, there's been pretty significant policy and economic uncertainty and quite a few surprises. With this in mind, what is your current outlook for the global economy for the second half of this year and into 2026.
Seth: So, we titled the outlook Skewed to the Downside because we really do think the U.S. economy, the global economy, is set to slow meaningfully from where we were coming into this year. Let's start with the U.S.
As you said, policy changes came in a lot this year since the new administration took over. I would say the two key ones from a macro perspective so far have been trade policy and immigration policy.
Tariffs have gone up, tariffs have gone down, tariffs have been suspended. Right now, what we think is going to ultimately take place is that we will see persistent, notable tariffs on China, lower tariffs on the rest of the world, and then we'll have to see how things evolve. What does that mean? Well, it means for the U.S. higher inflation and lower growth. In addition, immigration reform means that growth is going to slow because the growth rate of the labor force is going to slow.
Now around the rest of the world, the tariff shock matters as well. When the U.S. puts in tariffs on its imports from other countries, that's negative demand for those other countries. So, we're looking for pretty weak growth in …
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Japan Summit: Consumer Resilience and Trade Uncertainty
20 mei 2025 · 8 min
Live from the Morgan Stanley Japan Summit, our analysts Chiwoong Lee and Sho Nakazawa discuss their outlook for the Japanese economy and stock market in light of the country’s evolving trade partnerships with the U.S. and China. Lees meer
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----- Transcript -----
Lee-san: Welcome to Thoughts on the Market. I’m Chiwoong Lee, Principal Global Economist at Morgan Stanley MUFG Securities.
Nakazawa-san: And I’m Sho Nakazawa, Japan Equity Strategist at Morgan Stanley MUFG Securities.
Lee-san: Today we’re coming to you live from the Morgan Stanley Japan Summit in Tokyo. And we’ll be sharing our views on Japan in the context of global economic growth. We will also focus on Japan’s position vis-à-vis its two largest trading partners, the U.S. and China.
It’s Tuesday, May 20, at 3pm in Tokyo.
Lee-san: Nakazawa-san, you and I both have been talking with a large number of clients here at the summit. Based on your conversations, what issues are most top of mind right now?
Nakazawa-san: There are many inquiries about how to position because of the uncertainty of U.S. trade policy and the investment strategy for governance reform. These are both catalysts for Japan. And in Japan, there are multiple governance investment angles, with increasing interest in the removal of parent-child listings, which is when a parent company and a subsidiary company are both listed on an exchange. This reform [would] remove the subsidiaries. So, clients are very focused on who will be the next candidate for the removal of a parent-child listing.
And what are you hearing from clients on your side, Lee-san?
Lee-san: I would say the most frequent questions we received were regarding the Trump administration's policies, of course. While the reciprocal tariffs have been somewhat relaxed compared to the initial announcements, they still remain very high; and there was a strong focus on their negative impact on the U.S. economy and the global economy, including Japan.…
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Market Risks Persist After U.S.-China Trade Detente
19 mei 2025 · 4 min
Markets have reacted positively to the U.S.-China détente in tariffs. Our Chief Fixed Income Strategist, Vishy Tirupattur, digs into the rallies to better understand potential longer-term outcomes. Lees meer
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----- Transcript -----
Vishy Tirupattur: Welcome to Thoughts on the Market. I am Vishy Tirupattur, Morgan Stanley's Chief Fixed Income Strategist. Today I'll talk about the impact of last week's 90-day pause in the reciprocal tariffs between the U.S. and China, and the impact on the economy and markets.
It's Monday, May 19th at 11am in New York.
Market response to last Monday's announcement has been resoundingly positive. The S&P 500 was up 4.5 percent in the first four days since the announcement and the year-to-date returns are back in the black after Liberation Day drove steep declines in April.
Credit markets have also rallied, notably with the investment grade spreads tightening by over 10 basis points and high yield spreads by over 50 basis points. And the Treasury market took out 50 basis points of rate cuts in 2025, leaving market implied rate cuts by the end of 2026 at around 100 basis points.
While these moves across markets are significant, it is really important to put them into perspective and tease out what this detente in trade tensions implies. And more importantly, what it does not imply.
On the positive side, we think that the de-escalation reduces the risk of a sudden stop in trade volumes and a sharp rise in unemployment rate. While this is clearly just a truce and we don't know exactly where the tariffs between the two largest economies in the world will end up, it seems reasonable to infer that tariffs in the vicinity of 125 percent or 145 percent are substantially less likely now. Overall, the probability of a U.S. recession, therefore, has fallen on the margin.
To be clear, a recession during 2025 was never really our base case. But the de-escalation shifts risks in the direction of a little more gr…
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Lessons Amid the Market Rollercoaster
16 mei 2025 · 4 min
As market uncertainty continues around the Trump administration’s trade policy, our Head of Corporate Credit Research Andrew Sheets reflects on the key takeaways that investors may learn from the ongoing volatility. 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 discuss what we think we can actually learn from all of the back and forth in markets.
It's Friday, May 16th at 2pm in London.
One of the dominant questions of 2025 has been and continues to be: What exactly is the strategy behind U.S. tariff policy. Are these tariffs simply a negotiating tactic, designed to bring countries to the table in order to strike quick deals. Or are they something very, very different. An attempt to fundamentally reduce U.S. trade deficits, raise significant revenue, and bring production back to American shores.
At a recent conference with some of our largest investors, we asked them which of these explanations they thought best applied. Well, about a quarter thought it was a negotiating tactic; another quarter thought it was that fundamental shift. And the remaining half simply weren't sure yet.
Now, it's possible that this ambiguity is actually the point designed to keep trade partners guessing in order to secure better terms. It's also possible that very different views on trade exist within the administration, and we're seeing them vie for influence – perhaps almost in real time. So, amidst all this uncertainty and back and forth, it's useful for investors to try to take a step back and think what, if anything, we've learned.
First, we think we've learned that markets have a pretty clear view on tariffs. Credit and equities sold off aggressively as tariffs were ramped up. They have rallied back almost as quickly as these same policies were paused or reversed. Second, this back and forth does complicate the economic …
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The Rise Of The Humanoid Economy
15 mei 2025 · 10 min
Our analysts Adam Jonas and Sheng Zhong discuss the rapidly evolving humanoid technologies and investment opportunities that could lead to a $5 trillion market by 2050. Lees meer
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----- Transcript -----
Adam Jonas: Welcome to Thoughts on the Market. I'm Adam Jonas Morgan Stanley's Global Head of Autos and Shared Mobility.
Sheng Zhong: And I'm Sheng Zhong, Head of China Industrials.
Adam Jonas: Today we're talking about humanoid robots and the $5 trillion global market opportunity we see by 2050.
It's Thursday, May 15th at 9am in New York.
If you're a Gen Xer or a boomer, you probably grew up with the idea of Rosie, the robot from the Jetsons. Rosie was a mechanical butler who cooked, cleaned, and did the laundry while dishing out a side of sarcasm.
Today's idea of a humanoid robot for the home is much more evolved. We want robots that can adapt to unpredictable environments, and not just clean up a messy kitchen but also provide care for an elderly relative. This is really the next frontier in the development of AI. In other words, AI must become more human-like or humanoid, and this is happening.
So, Sheng, let's start with setting some expectations. What do humanoid robots look like today and how close are we to seeing one in every home?
Sheng Zhong: The humanoid is like a young child, in my opinion, although their abilities are different. A robot is born with a developed brain that is Large Language Model, and its body function develops fast.
Less than three years ago, a robot barely can walk, but now they can jump, they can run. And just in last week, Beijing had a humanoid half marathon. While robot may lack on connecting its brain to its body action for work execution; sometimes they fail a lot of things. Maybe they break cups, glasses, and even they may fall down.
So, you definitely don't want a robot at home like that, until they are safe enough and can help on something. To achieve that a lot of training and practic…
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What the Tax Debate Could Mean for Markets
14 mei 2025 · 10 min
Our strategists Michael Zezas and Ariana Salvatore provide context around U.S. House Republicans’ proposed tax bill and how investors should view its potential market impact. 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, Public Policy Strategist.
Michael Zezas: Today, we'll dig into Congress's deliberations on taxes and fiscal spending.
It's Wednesday, May 14th at 10am in New York.
Michael Zezas: So, Ariana, there's been a lot of news around the tax and spending plans that Congress is pursuing; this fiscal package – and clients are really, really focused on it. You're having a lot of those conversations right now. Why are clients so focused on all of this?
Ariana Salvatore: So, clients have reasons to focus on this tax policy bill across equities, fixed income, and for macroeconomic impacts.
Starting with equities, there's a lot of the 2017 tax cut bill that's coming up for expiration towards the end of this year. So, this bill is Congress's chance to extend the expiring TCJA. And add on some incremental tax cuts that President Trump floated on the campaign trail. So, there's some really important sector impacts on the specific legislation side. And then as far as the deficit goes, that matters a lot for the economic ramifications next year and for bond yields.
But Mike, to pivot this back to you, where do you think investor expectations are for the outcome of this package?
Michael Zezas: So there's a lot of moving pieces in this fiscal policy package, and I think what's happening here is that investors can project a lot onto this. They can project a lot of positivity and constructive outcomes for markets; and a lot of negativity and negative outcomes for markets.
So, for example, if you are really focused on the deficit impact of cutting taxes and whether or no…
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Can Private Credit Weather Macro Risks?
13 mei 2025 · 7 min
Our analysts Vishy Tirupattur and Joyce Jiang discuss the health of private credit as default pressures are building for borrowers amid weaker growth, fewer rate cuts and policy uncertainty. 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.
Joyce Jiang: And I'm Joyce Jiang, U.S. Leverage Finance Strategist.
Vishy Tirupattur: Today we'll take a look at private credit markets. Will it stay resilient in the current macro conditions? Or a reckoning is ahead of us.
It's Tuesday, May 13th at 10am in New York.
Tariffs and policy uncertainty are on the top of mind for people with an eye on the economy and markets. Certainly, a frequent topic of discussion for us on this podcast. In this environment, there has been growing concern about the health of corporate credit – and within corporate credit direct lending or middle market segments, where companies tend to be smaller in size and have weaker fundamentals are of particular concern. The business models of these companies are sensitive to slower growth.
Joyce, can you map out the risks associated with private credit companies?
Joyce Jiang: To your point, risks are rising in private credit, but I think these risks would be measured given the still resilient fundamental backdrop. Looking at fundamental trends, there is no clear sign of leverage building up in the system yet, and multiple data sources actually show that the leverage ratios among direct lending companies have either improved or remained flat. And that's very different from the previous cycles where excessive corporate leverage set the stage for the eventual downturn.
So, this time around credit, including both public credit and private credit, is not the source of the problem. But, of course, these direct lending companies would be impacted by higher tariffs. So, Vishy what's your view on the tariff impact?
Vishy T…
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U.S.-China Trade Truce: What’s Next?
12 mei 2025 · 4 min
Equity markets saw big rallies after trade tensions eased over the weekend. Our CIO and Chief U.S. Equity Strategist Mike Wilson explains why he’s optimistic that the worst of the market trough is over. 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 recent tariff negotiations for equity markets.
It's Monday, May 12th at 11:30am in New York.
So, let’s get after it.
Over the weekend, U.S.-China trade negotiations made better than expected progress with both sides agreeing to a détente in the trade war that began just one short month ago. The main question I’m getting from investors is whether they should trust this initial agreement, and if it will eventually lead to something more sustainable? From my perspective, this misses the more important point for equity investors. To remind listeners, equity markets trade in the future.
Therefore, the question to ask yourself is do you think things will be more or less uncertain in six months and will they be better or worse? The other thing to consider is that stocks trade on the second derivative, or rate of change, in growth. On that score, I believe it is likely we saw the trough rate of change in variables that tend to correlate with stock prices the most.
More specifically, earnings revisions breadth showed a meaningful uptick last week for the first time this year. Some of this was driven by a pull forward in demand during the first quarter ahead of the tariff announcements that led to better than feared earnings. In addition, several leading companies posted better than expected results thanks to a weaker dollar. Importantly, the translation benefit for U.S. multinational earnings is likely to be a big earnings tailwind for the next six months.
Many of the growth negative things we were worried about five months ago have play…
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The Eye of a Market Storm
9 mei 2025 · 4 min
The initial shock of the U.S. administration’s tariff announcements is over, but Andrew Sheets, our Head of Corporate Credit Research, suggests the current calm could still give way to headwinds for the markets. Lees meer
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----- Transcript -----
Andrew Sheets: Welcome to Thoughts on the Market. I'm Andrew Sheets, Head of Corporate Credit Research at Morgan Stanley. Today we're going to discuss whether the worst is over for markets – or whether it's just the eye of the storm.
It's Friday, May 9th at 2pm in London.
After extreme recent volatility, markets have bounced back, generally unwinding their losses since April 2nd. So was that it? The shock of tariff announcements and positioning adjustments may have now passed through, but the impact on the real economy is still to come. In meteorological terms, we think this may be just the eye of the storm.
There are several specific bouts of potentially bad weather that we're looking at, driven by tariffs that may be about to pass through.
First is the Federal Reserve. Our economists still see no cuts from the Fed this year as tariffs keep inflation elevated on our forecast. The markets in contrast are expecting more action. A scenario where credit markets face both weaker growth and a lack of central bank support remains one of our top concerns.
Second is the data. So far in 2025, measures of consumer and company expectations have generally been weak, while readings of activity have tended to be stronger. Now, we think there's a good historical case that it's the expectations that tend to leave and are thus concerned that actual activity could start to soften – as it starts to be measured in a post tariff period.
To this end, we're keenly watching measures like shipping and trucking activity, which could give us a better picture of the real impact. Again, a core driver of our concern, despite the economic data holding up so far, is that the impact of tariffs usually takes more time. …
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Why is the Taiwanese Dollar Suddenly Surging?
8 mei 2025 · 11 min
Investors were caught off guard last week when the Taiwanese dollar surged to a multi-year high. Our strategists Michael Zezas and James Lord look at what was behind this unexpected rally. Lees meer
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----- Transcript -----
Michael Zezas: Welcome to Thoughts on the Market. I'm Michael Zezas, Morgan Stanley's Global Head of Fixed Income Research and Public Policy Strategy.
James Lord: And I'm James Lord Morgan Stanley's, Global Head of FX and EM Strategy.
Michael Zezas: Today, we'll focus on some extreme moves in the currency markets and give you a sense of what's driving them, and why investors should pay close attention.
It's Thursday, May 8th at 10am in New York.
James Lord: And 3pm in London.
Michael Zezas: So, James, coming into the year, the consensus was that the U.S. dollar might strengthen quite a bit because the U.S. was going to institute tariffs amongst other things. That's actually not what's happened. So, can you explain why the dollar's been weakening and why you expect this trend to continue?
James Lord: I think a big factor for the weakening in the dollar, at least in the initial part of the year before the April tariff announcements came through, was a concern that the U.S. economy was going to be slowing down this year. I mean, this was against some of the consensus expectations at the beginning of the year.
In our year ahead outlook, we made this call that the dollar would be weakening because of the potential weakness in the U.S. economy, driven by slow down in immigration, limited action on fiscal policy. And whatever tariffs did come through would be kind of damaging for the U.S. economy.
And this would all sort of lead to a big slowdown and a kind of end to the U.S. exceptionalism trade that people now talk about all the time. And I think since April 1st or April 2nd tariff announcements came, the tariffs were so large that it raised real concerns about the damage that was potentially going to happen to …
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Are Investors Searching for New ‘Safe Havens’?
7 mei 2025 · 6 min
The traditional correlations between some asset classes went haywire in April. Our analysts Serena Tang and Vishy Tirupattur discuss whether, in this environment, investors still consider U.S. Treasuries and the U.S. dollar to be reliable ports in a storm. 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.
Vishy Tirupattur: And I'm Vishy Tirupattur, Morgan Stanley's Chief Fixed Income Strategist.
Serena Tang: Today's topic, how investors' perceptions of safe havens are evolving, the impact on correlation between asset classes, and what all this means for your portfolio.
It's Wednesday, May 7th at 10am in New York.
April was a really challenging month, and some market moves were highly unusual. There was also a lot of investor concern whether U.S. Treasuries would continue to be a safe haven. In fact, this became one of the biggest market debates over the last few weeks.
Vishy, let's start here. Prior to this recent sell off, foreign investors looked at U.S. assets as a safe haven. Why is that? And is it still the case now after this turbulent month?
Vishy Tirupattur: So, Serena, if you just step back and look at it, U.S. enjoyed positive growth differentials and positive yield differentials with developed markets in the rest of the world. On top of that, there was a consistent policy – not necessarily infallible policy – but there's a consistent policy with a clear sense of demarcation between the executive and the central bank.
All of this meant U.S. was a very attractive destination for foreign investor flows. Not only during periods of normalcy where U.S. equities really attracted inflows and performed really well, but also during the periods of economic stress; where even periods where the stress was coming from the U.S. itself, such as the Global Financial Crisis. This correlation between bonds and stocks held and U.S. Treasurie…
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U.S. Economy: Solid Footing For Now, Uncertainty Ahead
6 mei 2025 · 11 min
With the May FOMC meeting in progress, our analysts Matt Hornbach and Michael Gapen offer perspective on U.S. economic projections and whether markets are aligned. 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 we're talking about the Federal Open Market Committee Meeting underway, and the path for rates from here.
It's Tuesday, May 6th at 10am in New York.
Mike, before we talk about your expectations for the FOMC meeting itself, I wanted to get your take on the U.S. economy heading into the meeting. How are you seeing things today? And in particular, how do you think what happened on April 2nd, so-called Liberation Day, affects the outlook?
Michael Gapen: Yeah, I think right now, Matt, I would say the economy's still on relatively solid footing, and by that I mean the economy had been moderating. Yes, the first quarter GDP print was negative. But that was mainly because firms were frontloading a lot of inventories through imports. So imports were up over 40 percent at an annualized pace in the quarter. A lot of that went into inventories and into business spending. That was just a mechanical drag on activity.
And the April employment report, I think, showed the same thing. We're now averaging about 145,000 jobs per month this year. That's down from about 170,000 per month in the second half of last year. So the hiring rate is slowing down, but no signs of a sudden stop. No signs in layoffs picking up. So I'd say the economy is on fairly solid footing, and the labor market is also on fairly solid footing – as we enter the period now when we think tariffs will have a greater effect on the outlook.
So you asked, you know, Liberation Day. How does that affect the outlook? Right now we'd say it puts a lot of uncertainty in front of us. on p…
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Munis: Tax-Free Income in Times of Stress
6 mei 2025 · 9 min
Morgan Stanley Research analyst Mark Schmidt and Investment Management’s Craig Brandon discuss the heightened uncertainty in the U.S. municipal bonds market. Lees meer
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For a full list of episode disclosures click here.
----- Transcript -----
Mark Schmidt: Welcome to Thoughts on the Market. I'm Mark Schmidt, Morgan Stanley's Head of Municipal Strategy.
Craig Brandon: I'm Craig Brandon, Co-Director of Municipal Investments at Morgan Stanley Investment Management.
Mark Schmidt: Today, let's talk about the biggest market you hardly ever hear about – municipal bonds, a $4 trillion asset class.
It's Monday, May 5th at 10am in Boston.
Mark Schmidt: If you've driven, flown, gone to school or turned on a tap, chances are munis made it happen. Although munis are late cycle haven, they were not immune to the latest bout of market volatility. Craig, why was April so tough?
Craig Brandon: So, what we say in April, it was sort of the trifecta of things that happened that were a little different than other asset classes. The first thing that happened is we saw a significant increase in treasury rates – and munis are generally correlated to treasuries. We're a very high-quality asset class, that's viewed as a duration asset class. So, one thing we saw were rates going up. When we see rates going up, you generally see money coming out of the market, right? So, I think investors were a little bit impacted by the higher rates, the correlation to treasuries, the duration, and saw some flows out of the market.
Secondly, what we saw is conversation about the tax exemption in Washington D.C. What that did is it caused muni issuers to pull their issuance forward. So, if you're an infrastructure issuer, you are issuing bonds in the next year to year and a half; you're going to pull that forward because if there's any risk of loss of the tax exemption, you want to get these bonds issued today. So that's basically what drives technicals. It's supply an…
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Why the UK May Be Poised for a Surprising Rebound
2 mei 2025 · 8 min
Despite news that the UK economy is set to slow due to uncertainty around US trade policy, our analysts Andrew Sheets and Bruna Skarica explain why they have a more optimistic outlook. 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.
Bruna Skarica: And I'm Bruna Skarica, Chief UK Economist at Morgan Stanley.
Andrew Sheets: Today we're going to talk about the United Kingdom and why, despite a downbeat outlook by many in the market, we remain more optimistic.
It's Friday, May 2nd at 2pm in London.
Bruna, it's great to talk to you again about the UK and not just because this is an unusual day in London where it's sunny and warm, and at the moment warmer than Los Angeles. You know, when discussing the UK, I do think you kind of need to take a step back. This is a country and an economy that's had a tough number of years where growth has been sub-trend, inflation's been higher, and a lot of assets have traded at a discount.
So maybe just to give some context, talk to us a little bit about the last couple of years in the UK and the challenges the economy has faced.
Bruna Skarica: Indeed, Andrew, I do think it's important to take a step back to appreciate just the amount of supply side shocks the UK has seen in recent years. First, between 2016 and 2020, of course, the country had to navigate Brexit negotiations. The elevated uncertainty kept a lid on business CapEx. In 2020, of course, as the rest of the world, we saw the lockdown and the pandemic. What followed were supply chain disruptions, and then, the European energy shock in 2022. I do want to zoom in on this final point because in its scale, the natural gas price surge in the UK was twice more of a hit to growth compared to the 1970s oil price shock.
We've also seen a fair share of volatile market moves, most notably around the mini budget in the autumn of 2022. On top o…
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Can South Korea Afford To Grow Old?
2 mei 2025 · 5 min
Our Chief Korea and Taiwan Economist Kathleen Oh discusses Korea's recent pension reform and its implications for the country's rapidly aging population. Lees meer
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----- Transcript -----
Welcome to Thoughts on the Market. I’m Kathleen Oh, Morgan Stanley’s Chief Korea and Taiwan Economist. Today I’ll revisit Korea's demographic emergency and how the recent pension reform is trying to address it.
It's Thursday, May 1st, at 4pm in Hong Kong.
Some of you may remember that I came on the show last fall to talk about the crisis-level demographic challenges in Korea. Korea officially became a super-aged society at the end of 2024. This means that more than 20 per cent of the population is 65 or older.
In the face of its rapidly aging population and a fertility rate that has hit rock bottom, Korea is taking decisive action finally. The national assembly recently passed a landmark pension reform bill to amend the National Pension Act. This measure marks the first major change to its pension system in 18 years. And it’s supposed to improve the pension fund's financial sustainability to prepare for a rapidly aging population that will only accelerate from here.
The amendments include raising pension contribution rates and adjusting the income replacement ratio to 43 per cent. These changes aim to delay the depletion of the fund to 2064 to 2071, in an upside scenario. Without this reform, the fund would have been depleted by 2055, just 30 years later.
This reform avoids having to sell the fund's financial assets by delaying depletion. It also assures pension-holders of the stability of future pension assets. And, last but not least, it increases the pension fund's capacity for financial investments, which could lead to higher returns.
This is the first step towards making legislative, and therefore more structural changes to respond to the reality of a super-aged society. Moreover, it kicks off a sweeping reform agenda that includes the pe…
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A Possible Roadmap for U.S. Tariff Policy
30 april 2025 · 11 min
Our analysts Michael Zezas and Rajeev Sibal unpack the significance of a little-discussed clause in the Trump administration’s tariff policy, which suggests investors should think less about countries and more about products. Lees meer
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----- Transcript -----
Michael Zezas: Welcome to Thoughts on the Market. I'm Michael Zezas, Morgan Stanley's Global Head of Fixed Income Research and Public Policy Strategy.
Rajeev Sibal: And I am Rajeev Sibal, Senior Global Economist.
Michael Zezas: Today we look through the potential escalation and de-escalation of tariff rates and discuss what the lasting impact of higher tariffs will be for companies and the economy.
It's Wednesday, April 30th at 11am in New York.
Rajeev Sibal: And 4pm in London.
Michael Zezas: Last week during a White House News conference, President Trump announced that tariffs on goods from China will come down substantially, but it won't be zero. And this was after U.S. Treasury Secretary Scott Bessent made comments about high tariffs against China being unsustainable, according to some news reports.
Now, some of this has been walked back, and there's further discussion of challenging negotiations with China and potential escalations if those negotiations don't go well. Meanwhile, Canadian voters elected a Liberal government, led by Mark Carney yesterday. That federal election played out against the backdrop of the U.S. proposing higher tariffs on its northern neighbors.
So, Rajeev, amidst all this noise, what seems clear is that tariff levels will end up higher than where we started before President Trump took office. Though we don't exactly know how high they will be. What is it that investors need to understand about the economic impacts of higher tariffs just generically?
Rajeev Sibal: So yeah, we do view that tariffs are going to structurally be higher than they were before the Trump administration. This has been a baseline of our outlook since last year. Now I th…
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Is the Oil Market Flashing a Potential Recession Warning?
29 april 2025 · 5 min
Our Global Commodities Strategist Martijn Rats discusses the ongoing volatility in the oil market and potential macroeconomic scenarios for the rest of this year. Lees meer
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----- Transcript -----
Welcome to Thoughts on the Market. I’m Martijn Rats, Morgan Stanley’s Global Commodities Strategist. Today on the podcast – the uncertainty in the oil market and how it can play out for the rest of the year.
It’s Tuesday, April 29th, at 3pm in London.
Now, notwithstanding the energy transition, the cornerstone of the world’s energy system is still the oil market; and in that market, the most important price is the one for Brent crude oil. Therefore, fluctuations in oil prices can have powerful ripple effects on various industries and sectors, as well as on the average consumer who, of course, pays attention to gasoline prices at the pump. Now with that in mind, we are asking the question: what's been happening in the global oil market recently?
Earlier this month, Brent crude oil prices dropped sharply, falling 12.5 per cent over just two trading sessions, from around 75 dollars a barrel to close to 65 dollar a barrel. That was primarily driven by two factors: first, worries about the impact of trade wars on the global economy and therefore on oil demand, after the Trump administration’s announcement of reciprocal tariffs.
Secondly, was OPEC’s announcement that, notwithstanding all the demand uncertainty that this created, it would still accelerate supply growth, progressing not only with the planned production increases for May; but bring forward the planned production increases for June and July as well. Now you can imagine, when OPEC releases extra production whilst the GDP outlook is weakening, understandably, this weighs on the price of oil.
Now to put things into context, two-day declines of 12.5 per cent are rare. The Brent futures market was created in 1988, and since then this has only happened 24 times, and 22 of those instan…
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What Should Investors Expect from Earnings Season?
28 april 2025 · 4 min
Our CIO and Chief U.S. Equity Strategist Mike Wilson discusses how market volatility over the last month will affect equity markets as earnings season begins. 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, I will discuss what to expect from Equity markets as we enter the heart of earnings season.
It's Monday, April 28th at 11:30am in New York.
So, let’s get after it.
The S&P 500 tested both the lower and upper ends of our 5000-5500 range last week, reinforcing the notion that we remain in a volatile trading environment. Incrementally positive news on a potential tariff deal with China and hope for a more dovish Fed lifted stocks into the end of the week, and the S&P 500 closed slightly above the upper end of our range. While a modest overshoot of 5500 can persist very short-term, a sustainable break above this level is dependent on developments that have yet to come to fruition.
Those include a tariff deal with China that brings down the effective rate materially; a more dovish Fed; 10-year Treasury yields falling below 4 percent without recessionary risks increasing; and a clear rebound in earnings revisions. Bottom line, until we see clear positive shift in one or more of these factors, range trading is likely to continue with risks to the downside given that we are now at the top end of the range.
A frequent question we're getting from clients is does the soft data matter for equities or is the market waiting for the hard data to make up its mind in terms of an upside or downside breakout above or below this range? Our view has been consistent that the most important macro data at this stage is from the labor market while the most important micro data are earnings revisions. Equities have already priced a meaningful slowdown in growth relative to expectations.
What's not priced is a labor cycle or recession. While this risk h…
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Tariffs Could Drag on Growth in Asia as Well as U.S.
25 april 2025 · 11 min
Our U.S. and Asia economists Michael Gapen and Chetan Ahya discuss how tariff uncertainty is shaping their expectations for these economies over the second half of 2025. 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.
Chetan Ahya: And I'm Chetan Ahya, Chief Asia Economist.
Michael Gapen: Today we'll discuss some significant changes to our Asia growth forecast on the heels of tariffs. As well as how the U.S. economy is reacting to the changes in the global trading environment.
It's Friday, April 25th at 8am in New York.
Chetan Ahya: And 8pm in Hong Kong.
Michael Gapen: So, Chetan, since the last time we were both on the show, it appears that we are headed towards at least some de-escalation of trade tensions. Just last week, you wrote in your report that the tariffs on China are too prohibitive for any trade to take place – and that you expected some dialing down of the escalatory action. And this week the administration started to talk about easing tariffs on China significantly.
Considering all the events since April 2nd – and it's felt like a lot of events since April 2nd –where does it leave you in terms of how you are thinking about the outlook?
Chetan Ahya: So, Mike, that's right. You know what we thought was that the current level of tariffs that the U.S. has on China and what China has on the U.S. means that effectively there are no transactions possible
But look, even after those tariff rates are going down, we are still expecting it to be in the range of around 60 per cent. And that would still be relatively high level of tariffs. If I were just to translate this into what it means for the whole region? So, for the whole region, the weighted average tariff will still be around 32 per cent. And remember this number was close to 5 per cent in early January.
So, we are talking about a huge amount of uncertainty related to this…
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Will Housing Prices Keep Climbing?
24 april 2025 · 8 min
Our Co-Heads of Securitized Products Research Jay Bacow and James Egan explain how mortgage rates, tariffs and stock market volatility are affecting the U.S. housing market. Lees meer
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----- Transcript -----
Jay Bacow: Welcome to Thoughts on the Market. I'm Jay Bacow, co-head of Securitized Products Research at Morgan Stanley.
James Egan: And I'm Jim Egan, the other co-head of Securitized Products Research at Morgan Stanley. And today we're here to talk about all of the headlines that we've been seeing and how they impact the U.S. housing market.
It's Thursday, April 24th at 9am in New York.
Jay Bacow: Jim, there are a lot of headlines right now. Mortgage rates have decreased about 60 basis points from the highs that we saw in January through the beginning of April. But since the tariff announcements, they've retraced about half of that move. Now, speaking of the tariffs, I would imagine that's going to increase the cost of building homes.
So, what does all of this mean for the U.S. housing market?
James Egan: On top of everything you just mentioned, the stock market is down over 15 per cent from recent peaks, so there is a lot going on these days. We think it all has implications for the U.S. housing market. Where do you want me to start?
Jay Bacow: I think it's hard to have a conversation these days without talking about tariffs, so let's start there.
James Egan: So, we worked on the impacts of tariffs on the U.S. housing market with our colleagues in economics research, and we did share some of the preliminary findings on another episode of this podcast a couple weeks ago. Since then, we have new estimates on tariffs, and that does raise our baseline expectation from about a 4 to 5 per cent increase in the cost of materials used to build a home to closer to 8 per cent right now.
Jay Bacow: Now I assume at least some of that 8 per cent is going to get pushed through into home prices, which presumably is then going to put mo…
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Is the Beverage Industry Drying Up?
23 april 2025 · 5 min
Morgan Stanley’s Head of European Consumer Staples, Sarah Simon, discusses why aging populations, wellness trends and Gen Z’s moderation are putting pressure on the long-term outlook for alcoholic beverages. Lees meer
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----- Transcript -----
Welcome to Thoughts on the Market. I’m Sarah Simon, Head of the European Consumer Staples team. Today’s topic: Is America sobering up? Recent trends point to a national decline in alcohol use.
It's Wednesday, April 23rd, at 2pm in London.
Picture this: It's Friday night, and you're at a bar with friends. The drinks menu offers many options. A cold beer or glass of wine, sure. But how about a Phony Negroni. And your friends nod approvingly.
This isn't just a passing trend – we believe it's a structural shift that's set to reshape the beverage industry.
Overall alcohol consumption in volume terms has been relatively flat over the last decade in the U.S. - with spirits growing mid single digits in value terms and beer growing low single digits. But both categories are currently declining. The big debate is whether it’s cyclical or structural. We acknowledge that the consumer is under pressure right now, but we equally see long term structural pressures that are starting to play out. There are three key factors behind this trend: increased moderation by younger drinkers, an ageing population, and then broader health and wellness trends.
So let’s talk first about Gen Z – those born between 1997 and 2012. They're drinking notably less than previous generations of the same age. In fact, today’s 18-34 year-olds drink 30 per cent less than the same age group 20 years ago. And we think it’s pretty unlikely they will catch up as they get older. This isn't a temporary blip caused by the after-effects of COVID-19 lockdowns or economic pressures. It's a long-term trend that predates both of these factors. And importantly this isn’t the case of abstinence – as in the case of tobacco – but moderation. Young…
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How Investors are Playing Defense
22 april 2025 · 4 min
Our Chief Cross-Asset Strategist Serena Tang discusses the market’s shifting perception of risk and what’s behind some unusual patterns in fund flows among asset classes. Lees meer
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No investment recommendation is made with respect to any of the ETFs or mutual funds referenced herein. Investors should not rely on the information included in making investment decisions with respect to those funds.
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Welcome to Thoughts on the Market. I’m Serena Tang, Morgan Stanley’s Chief Cross-Asset Strategist. Today I want to look at how investors are playing defense amid elevated macro uncertainty.
It’s Tuesday, April 22, at 10am in New York.
So, the last three weeks have brought intense volatility to global markets, and investors have had to reexamine their relationship with risk. Typically, in times like these, mutual fund and ETF flows from stocks into bonds serve as a clear gauge of investor defensiveness. But this pattern hasn’t really been informative this time around.
Instead, flows to gold – rather than bonds – have been the clearest evidence of flight-to-quality most recently. Between April 3rd and 11th almost US$5 billion went into gold ETFs globally, one of the strongest seven-day net flow stretches ever. There's been US$22 billion of net inflows to gold ETFs with assets under management totaling about US$250 billion year-to-date. Of the 10 days of the highest net inflows to gold ETFs over the last 20 years, three occurred in the last month.
Cash also benefited from the dash to defensives, with over US$100bn flowing into money market funds year-to-date. And we expect that reallocating to cash will be a theme for the rest of the year for many reasons. For one, our U.S. economists expect no Fed cuts in 2025 and back-loaded cuts in 2026 following a projected surge in core PCE inflation from tariffs. This means that money market fund yields should stay higher for longer. And with investors seeing the wild gyrations…
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Recession Fears Are a Wild Card for Markets
21 april 2025 · 5 min
Can the U.S. equity market break out of its expected range? Our CIO and Chief U.S. Equity Strategist Mike Wilson looks at whether the Trump administration’s shifting tariff policy and Fed uncertainty will continue weighing down stocks. Lees meer
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Welcome to Thoughts on the Market. I'm Mike Wilson, Morgan Stanley’s CIO and Chief U.S. Equity Strategist. Today, I will discuss what it will take for the US equity market to break out of the 5000-5500 range.
It's Monday, April 21st at 11:30am in New York.
So, let’s get after it.
Last week, we focused on our view that the S&P 500 was likely to remain in a 5000-5500 range in the near term given the constraints on both the upside and the downside. First, on the upside, we think it will be challenging for the index to break through prior support of 5500 given the recent acceleration lower in earnings revisions, uncertainty on how tariff negotiations will progress and the notion that the Fed appears to be on hold until it has more clarity on the inflationary and growth impacts of tariffs and other factors. At the same time, we also believe the equity market has been contemplating all of these challenges for much longer than the consensus acknowledges. Nowhere is this evidence clearer than in the ratio of Cyclical versus Defensive stocks as discussed on this podcast many times. In fact, the ratio peaked a year ago and is now down more than 40 per cent.
Coming into the year, we had a more skeptical view on growth than the consensus for the first half due to expectations that appeared too rosy in the context of policy sequencing that was likely to be mostly growth negative to start. Things like immigration enforcement, DOGE, and tariffs. Based on our industry analysts' forecasts, we were also expecting AI Capex growth to decelerate, particularly in the first half of the year when growth rate comparisons are most challenging. Recall the Deep Seek announcement in January th…
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How Much More Could Your Smartphone Cost?
17 april 2025 · 8 min
Our analysts Michael Zezas and Erik Woodring discuss the ways tariffs are rewiring the tech hardware industry and how companies can mitigate the impact of the new U.S. trade policy. Lees meer
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Michael Zezas: Welcome to Thoughts on the Market. I'm Michael Zezas, Morgan Stanley's Global Head of Fixed Income and Public Policy Research.
Erik Woodring: And I'm Erik Woodring, Head of the U.S. IT Hardware team.
Michael Zezas: Today, we continue our tariff coverage with a closer look at the impact on tech hardware. Products such as your smartphone, computers, and other personal devices.
It's Thursday, April 17th at 10am in New York.
President Trump's reciprocal tariffs announcements, followed by a 90 day pause and exemptions have created a lot of turmoil in the tech hardware space. People started panic buying smartphones, worried about rising costs, only to find out that smartphones may or may not be exempted.
As I pointed out on this podcast before, these tariffs are also significantly accelerating the transition to a multipolar world. This process was already well underway before President Trump's second term, but it's gathering steam as trade pressures escalate. Which is why I wanted to talk to you, Erik, given your expertise.
In the multipolar world, IT hardware has followed a China+1 strategy. What is the strategy, and does it help mitigate the impact from tariffs?
Erik Woodring: Historically, most IT hardware products have been manufactured in China. Starting in 2018, during the first Trump administration, there was an effort by my universe to diversify production outside of China to countries friendly with China – including Vietnam, Indonesia, Malaysia, India, and Thailand. This has ultimately helped to protect from some tariffs, but this does not make really any of these countries immune from tariffs given what was announced on April 2nd.
Michael Zezas: And what do the current tariffs – recognizing, of …
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Tariff Uncertainty Creates Opportunity in Credit
16 april 2025 · 4 min
The ever-evolving nature of the U.S. administration’s trade policy has triggered market uncertainty, impacting corporate and consumer confidence. But our Head of Corporate Credit Research Andrew Sheets explains why he believes this volatility could present a silver lining for credit investors. Lees meer
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Welcome to Thoughts on the Market. I'm Andrew Sheets, Head of Corporate Credit Research at Morgan Stanley. Today I’m going to talk about how high uncertainty can be a risk for credit, and also an opportunity.
It's Wednesday, April 16th at 9am in New York.
Markets year-to-date have been dominated by questions of U.S. trade policy. At the center of this debate is a puzzle: What, exactly, the goal of this policy is?
Currently, there are two competing theories of what the U.S. administration is trying to achieve. In one, aggressive tariffs are a negotiating tactic, an aggressive opening move designed to be bargained down into something much, much lower for an ultimate deal.
And in the other interpretation, aggressive tariffs are a new industrial policy. Large tariffs, for a long period of time, are necessary to encourage manufacturers to relocate operations to the U.S. over the long term.
Both of these theories are plausible. Both have been discussed by senior U.S. administration officials. But they are also mutually exclusive. They can’t both prevail.
The uncertainty of which of these camps wins out is not new. Market strength back in early February could be linked to optimism that tariffs would be more of that first negotiating tool. Weakness in March and April was linked to signs that they would be more permanent. And the more recent bounce, including an almost 10 percent one-day rally last week, were linked to hopes that the pendulum was once again swinging back.
This back and forth is uncertain. But in some sense, it gives investors a rubric: signs of more aggressive tariffs would be more challenging to…
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Gold Rush Picks Up Speed
15 april 2025 · 4 min
As gold prices reach new all-time highs, Metals & Mining Commodity Strategist Amy Gower discusses whether the rally is sustainable. Lees meer
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Welcome to Thoughts on the Market. I’m Amy Gower, Morgan Stanley’s Metals & Mining Commodity Strategist. Today I’m going to talk about the steady rise we’ve had in gold prices in recent months and whether or not this rally can continue.
It’s Tuesday, April 15th, at 2pm in London.
So gold breached $3000/oz for the first time ever on 17th of March this year, and has continued to rise since then; but we would argue it still has room to run.
First of all, let’s look back at how we got here. So, gold already rallied 25 percent in 2024, which was driven largely by strong central bank demand as well as the start of the US Fed rate cutting cycle, and strong demand for bars and coins as geopolitical risk remained elevated.
And arguably, these trends have continued in 2025, with gold up another 22 percent, and now rising tariff uncertainty also contributing. This comes in two ways – first, demand for gold as a safe haven asset against this current macro uncertainty. And second as an inflation hedge. Gold has historically been viewed by investors as a hedge against the impact of inflation. So, with the U.S. tariffs raising inflation risks, gold is seeing additional demand here too.
But, of course, the question is: can this gold rally keep going? We think the answer is yes, but would caveat that in big market moves -- like the ones we have seen in recent weeks -- gold can also initially fall alongside other asset classes, as it is often used to provide liquidity. But this is often short-lived and already gold has been rebounding. We would expect this to continue with the price of gold to rise further to around $3500/oz by the third quarter of this year.
There are three key drivers behind this projection:
First, we see still strong physical demand for gold, both from central ba…
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Where Is the Bottom of the Market?
14 april 2025 · 5 min
Our CIO and Chief U.S. Equity Strategist Mike Wilson probes whether market confidence can return soon as long as tariff policy remains in a state of flux. Lees meer
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Welcome to Thoughts on the Market. I'm Mike Wilson, Morgan Stanley’s CIO and Chief U.S. Equity Strategist. Today on the podcast I’ll be discussing last week’s volatility and what to expect going forward.
It's Monday, April 14th at 11:30am in New York.
So, let’s get after it.
What a month for equity markets, and it's only halfway done! Entering April, we were much more focused on growth risks than inflation risks given the headwinds from AI Capex growth deceleration, fiscal slowing, DOGE and immigration enforcement. Tariffs were the final headwind to face, and while most investors' confidence was low about how Liberation Day would play out, positioning skewed more toward potential relief than disappointment.
That combination proved to be problematic when the details of the reciprocal tariffs were announced on April 2nd. From that afternoon's highs, S&P 500 futures plunged by 16.5 per cent into Monday morning. Remarkably, no circuit breakers were triggered, and markets functioned very well during this extreme stress. However, we did observe some forced selling as Treasuries, gold and defensive stocks were all down last Monday.
In my view, Monday was a classic capitulation day on heavy volume. In fact, I would go as far as to say that Monday will likely prove to be the momentum low for this correction that began back in December for most stocks; and as far back as a year ago for many cyclicals. This also means that we likely retest or break last week's price lows for the major indices even if some individual stocks have bottomed. We suspect a more durable low will come as early as next month or over the summer as earnings are adjusted lower, and multiples remain volatile with a downward bias given the Fed's apprehension to cut rates – or provide a…
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Is the Market Rebound a Mirage?
11 april 2025 · 4 min
Our Head of Corporate Credit Research analyzes the market response to President Trump’s tariff reversal and explains why rallies do not always indicate an improvement in the overall environment. Lees meer
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Welcome to Thoughts on the Market. I'm Andrew Sheets, head of Corporate Credit Research at Morgan Stanley. Today I’m going to talk about the historic gains we saw this week in markets, and what they may or may not tell us.
It's Friday April 11th at 2pm in London.
Wednesday saw the S&P 500 gain 9.5 percent. It was the 10th best day for the U.S. equity market in the last century. Which raises a reasonable question: Is that a good thing? Do large one-day gains suggest further strength ahead – or something else?
This is the type of Research question we love digging into. Pulling together the data, it’s pretty straightforward to sort through those other banner days in stock market history going back to 1925. And what they show is notable.
I’m now going to read to you when those large gains occurred, in order of the gains themselves.
The best day in market history, March 15th 1933, when stocks soared over 16 per cent? It happened during the Great Depression. The 2nd best day, Oct 30th 1929. During the Great Depression. The 3rd best day – Great Depression. The fourth best – the first trading day after Germany invaded Poland in 1939 and World War 2 began. The 5th best day – Great Depression. The 6th Best – October 2008, during the Financial Crisis. The 7th Best – also during the Financial Crisis. The 8th best. The Great Depression again. The 9th best – The Great Depression. And 10th best? Well, that was Wednesday.
We are in interesting company, to say the least. Incidentally, we stop here in the interest of brevity; this is a podcast known for being sharp and to the point. But if we kept moving further down the list, the next best 20 days in history all happen during either COVID, the 1987 Crash, a Recession, or…
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Why Tariffs Spurred a Dash for Cash
10 april 2025 · 7 min
Our analysts Vishy Tirupattur and Martin Tobias explain how the announcement of new tariffs and the subsequent pause in their implementation affected the bond market. Lees meer
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Vishy Tirupattur: Welcome to Thoughts on the Market. I am Vishy Tirupattur, Morgan Stanley's, Chief Fixed Income Strategist.
Martin Tobias: And I'm Martin Tobias, from the U.S. Interest Rate Strategy Team.
Vishy Tirupattur: Yesterday the U.S. stock market shot up quite dramatically after President Trump paused most tariffs for 90 days. But before that, there were some stresses in the funding markets. So today we will dig into what those stresses were, and what transpired, and what investors can expect going forward.
It's Thursday, April 10th at 11:30am in New York.
President Trump's Liberation Day tariff announcements led to a steep sell off in the global stock markets. Marty, before we dig into that, can you give us some Funding Markets 101? We hear a lot about terms like SOFR, effective fed funds rate, the spread between the two. What are these things and why should we care about this?
Martin Tobias: For starters, SOFR is the secured overnight financing rate, and the effective fed funds rate – EFFR – are both at the heart of funding markets.
Let's start with what our listeners are most likely familiar with – the effective fed funds rate. It's the main policy rate of the Federal Reserve. It's calculated as a volume weighted median of overnight unsecured loans in the Fed funds market. But volume in the Fed funds market has only averaged [$]95 billion per day over the past year.
SOFR is the most important reference rate for market participants. It's a broad measure of the cost to borrow cash overnight, collateralized by Treasury securities. It's calculated as a volume weighted median that covers three segments of the repo market. Now SOFR volumes have averaged 2.2 trillion per day over the past year.
Vishy Tirupattur: So, what you…
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Lingering Uncertainties After Tariff Reprieve
10 april 2025 · 4 min
Earlier today, President Trump announced a pause on reciprocal tariffs for 90 days. Our Global Head of Fixed Income Research and Public Policy Strategy Michael Zezas looks at the fallout. Lees meer
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Welcome to Thoughts on the Market. I’m Michael Zezas, Morgan Stanley’s Global Head of Fixed Income Research and Public Policy Strategy.
Today – possible outcomes of President Trump's sudden pause on reciprocal tariffs.
It’s Wednesday, April 9th, at 10pm in New York.
We’d actually planned a different episode for release today where my colleague Global Chief Economist Seth Carpenter and I laid out developments in the market thus far and looked at different sets of potential outcomes. Needless to say, all of that changed after President Trump announced a 90-day pause on most tariffs that were set to rise. And so, we needed to update our thinking.
It's been a truly unprecedented week for financial markets. The volatility started on April 2, with President Trump’s announcement that new, reciprocal tariffs would take effect on April 9. When added to already announced tariffs, and later adding even more tariffs in for China, it all added up to a promise by the US to raise its average tariffs to levels not seen in 100 years.
Understandably, equity markets sold off in a volatile fashion, reflecting investor concerns that the US was committed to retrenching from global trade – inviting recession and an economic future with less potential growth. The bond market also showed signs of considerable strain. Instead of yields falling to reflect growth concerns, they started rising and market liquidity weakened. The exact rationale is still hard to pin down, but needless to say the combined equity and bond market behavior was not a healthy situation.
Then, a reprieve. President Trump announced he would delay the implementation of most new tariffs by 90 days to allow negotiations to progress. And though he would keep China tariffs at levels over 100 per cent, the anno…
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Three Things That Could Ease Tariff Jitters
8 april 2025 · 5 min
Our CIO and Chief U.S. Equity Strategist explains why the new tariffs added momentum to a correction that was already underway, and what could ease the fallout in equity markets. Lees meer
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Welcome to Thoughts on the Market. I'm Mike Wilson, Morgan Stanley’s CIO and Chief U.S. Equity Strategist. Today on the podcast I’ll be discussing equity market reactions to the tariffs and what to expect from here.
It's Tuesday, April 8th at 11:30am in New York.
So, let's get after it.
From our perspective, last week's Liberation Day was more like the cherry on top for a market that had been dealing with multiple headwinds to growth all year, rather than the beginning. While the magnitude of the tariffs turned out to be worse than our public policy team's base line expectations, the price reaction appears capitulatory to us given that many stocks were already down 30 to 40 percent before the announcement on Wednesday. As discussed in last week’s podcast, our 5500 first half support level on the S&P 500 quickly gave way given this worse than expected outcome for tariffs. The price action since then has forced us to consider new technical support levels which could be as low as the 200-week moving average. And that would be 4700 on the S&P 500.
I think it’s worth highlighting that cyclical stocks started underperforming in April of last year and are now down more than 40 percent relative to defensive stocks. In other words, markets have been telling us for almost a year that growth was going to slow, and since January, it's been telling us it's going to slow significantly. In fact, cyclicals have underperformed defensives to a degree only seen during a recession, not prior to them. This fits very nicely with our long-standing view that most of the private economy has been much weaker than the headline numbers suggest – thanks to unprecedented fiscal spending, AI capex and wealthy consumers spending their gains from asset p…
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Tariff Roundtable: Global Economy on the Brink of Recession?
7 april 2025 · 12 min
As market turmoil continues, our global economists give their view on the ramifications of the Trump administration’s tariffs, and how central banks across key regions might react. Lees meer
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Seth Carpenter: Welcome to Thoughts on the Market. I'm Seth Carpenter, Morgan Stanley's, Global Chief Economist, and today we're going to be talking tariffs and what they mean for the global economy.
It's Monday, April 7th at 10am in New York.
Jens Eisenschmidt: It's 4pm in Frankfurt.
Chetan Ahya: And it's 10pm in Hong Kong.
Seth Carpenter: And so, I'm here with our global economists from around the world: Mike Gapen, Chief U.S. Economist, Chetan Ahya, our Chief Asia Economist, and Jens Eisenschmidt, our Chief Europe Economist. So, let's jump into it. Let me go around first and ask each of you, what is the top question that you are getting from investors around the world?
Chetan?
Chetan Ahya: Tariffs.
Seth Carpenter: Jens?
Jens Eisenschmidt: Tariffs.
Seth Carpenter: Mike?
Michael Gapen: Tariffs.
Seth Carpenter: All right. Well, that seems clear. Before we get into the likely effects of the tariffs, maybe each of you could just sketch for me where you were before tariffs were announced. Chetan, let me start with you. What was your outlook for the Chinese economy before the latest round of tariff announcements?
Chetan Ahya: Well Seth, working with our U.S. public policy team, we were already assuming a 15-percentage point increase on tariffs on imports from China. And China also was going through some domestic challenges in terms of high levels of debt, excess capacities, and deflation. And so, combining both the factors, we were assuming China's growth will slow on Q4 by Q4 basis last year – from 5.4 percent to close to 4 percent this year.
Jens, what about Europe? Before these broad-based tariffs, how were you thinking about the European economy?
Jens Eisenschmidt: We had penciled in a slight recovery, not rea…
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Tariff Fallout: Where Do Markets Go From Here?
4 april 2025 · 4 min
As markets continue reacting to the Trump administration’s tariffs, Michael Zezas, our Global Head of Fixed Income Research and Public Policy Strategy, lists the expected impacts for investors across equity sectors and asset classes. Lees meer
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Welcome to Thoughts on the Market. I’m Michael Zezas, Morgan Stanley’s Global Head of Fixed Income Research and Public Policy Strategy. Today we’ll be talking about the market impacts of the recently announced tariff increases.
It’s Friday, April 4th, at 1pm in New York.
This week, as planned, President Trump unveiled tariff increases. These reciprocal tariffs were hiked with the stated goal of reducing the U.S.’s goods trade deficit with other countries. We’ve long anticipated that higher tariffs on a broad range of imports would be a fixture of U.S. policy in a second Trump term. And that whatever you thought of the goals tariffs were driving towards, their enactment would come at an economic cost along the way. That cost is what helped drive our team’s preference for fixed income over more economically-sensitive equities.
But this week’s announcement underscored that we actually underestimated the speed and severity of implementation. Following this week’s reciprocal tariff announcement, tariffs on imports from China are approaching 60 per cent, a level we didn’t anticipate would be reached until 2026. And while we expected a number of product-specific tariffs would be levied, we did not anticipate the broad-based import tariffs announced this week. All totaled, the U.S. effective tariff rate is now around 22 per cent, having started the year at 3 per cent.
So what’s next? Our colleagues across Morgan Stanley Research have detailed their expected impacts across equity sectors and asset classes and here are some key takeaways to keep in mind.
First, we do think there’s a possibility that negotiation will lower some of these tariffs, particularly for traditional U.S…
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How Companies Can Navigate New Tariffs
3 april 2025 · 13 min
Our Thematics and Public Policy analysts Michelle Weaver and Ariana Salvatore discuss the top five strategies for companies to mitigate the effects of U.S. tariffs. Lees meer
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Faceoff: U.S. vs. European Equities
2 april 2025 · 10 min
Our analysts Paul Walsh, Mike Wilson and Marina Zavolock debate the relative merits of U.S. and European stocks in this very dynamic market moment. Lees meer
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What’s Weighing on U.S. Consumer Confidence?
2 april 2025 · 10 min
Our analysts Arunima Sinha, Heather Berger and James Egan discuss the resilience of U.S. consumer spending, credit use and homeownership in light of the Trump administration’s policies. Lees meer
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Are Any Stocks Immune to Tariffs?
31 maart 2025 · 4 min
Policy questions and growth risks are likely to persist in the aftermath of the Trump administration’s upcoming tariffs. Our CIO and Chief U.S. Equity Strategist Mike Wilson outlines how to seek investments that might mitigate the fallout. Lees meer
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Welcome to Thoughts on the Market. I'm Mike Wilson, Morgan Stanley’s CIO and Chief U.S. Equity Strategist. Today on the podcast – our views on tariffs and the implications for equity markets.
It's Monday, March 31st at 11:30am in New York.
So let’s get after it.
Over the past few weeks, tariffs have moved front and center for equity investors. While the reciprocal tariff announcement expected on April 2nd should offer some incremental clarity on tariff rates and countries or products in scope, we view it as a maximalist starting point ahead of bilateral negotiations as opposed to a clearing event. This means policy uncertainty and growth risks are likely to persist for at least several more months, even if it marks a short-term low for sentiment and stock prices.
In the baseline for April 2nd, our policy strategists see the administration focusing on a continued ramp higher in the tariff rate on China – while product-specific tariffs on Europe, Mexico and Canada could see some de-escalation based on the USMCA signed during Trump’s first term. Additional tariffs on multiple Asia economies and products are also possible. Timing is another consideration. The administration has said it plans to announce some tariffs for implementation on April 2nd, while others are to be implemented later, signaling a path for negotiations. However, this is a low conviction view given the amount of latitude the President has on this issue.
We don't think this baseline scenario prevents upside progress at the index level – as an "off ramp" for Mexico and Canada would help to counter some of the risk from moderately higher China tariffs. Furthermore, product level tariffs on the EU …