Thoughts on the Market Podcast Por Morgan Stanley arte de portada

Thoughts on the Market

Thoughts on the Market

De: Morgan Stanley
Escúchala gratis

Short, thoughtful and regular takes on recent events in the markets from a variety of perspectives and voices within Morgan Stanley.

© Morgan Stanley & Co. LLC Economía Finanzas Personales
Episodios
  • A New Test for Private Credit

    A New Test for Private Credit
    Mar 31 2026
    Our Chief Fixed Income Strategist Vishy Tirupattur and Morgan Stanley Investment Management’s Global Head of Private Credit & Equity David Miller discuss the recent pressure on the private credit market, potential risks and opportunities that remain in that space.Read more insights from Morgan Stanley.----- Transcript -----Vishy Tirupattur: Welcome to Thoughts on the Market. I'm Vishy Tirupattur, Morgan Stanley's Chief Fixed Income Strategist. David Miller: And I'm David Miller, Global Head of Private Credit and Equity within Morgan Stanley Investment Management. Vishy Tirupattur: Today – the evolving risks and opportunities in private credit. It's Tuesday, March 31st at 10 am In New York. Until recently, private credit was among the fast-growing parts of the financial system. In just over a decade, it went from a niche strategy to a market that's well worth over a trillion dollars. After years of outsized inflows and unusually smooth return, private credit is now in focus, and investors are asking tough questions about liquidity, transparency, and valuation. David, you manage private credit and equity portfolios within Morgan Stanley Investment Management. Do you think the industry is facing its first real stress test? And how do you think the industry is faring? David Miller: So, I think private credit has been tested before, you could go back to the GFC. And I know that was a long time ago and the industry was quite a bit smaller. But you could certainly look to the pandemic and the rate shocks of [20]22 - [20]23 as a stress test. And I think private credit performed, you know, quite well through that, despite the initial volatility. We saw some of that recently last year with Liberation Day; and the current environment from a fundamental perspective doesn't feel as bad as those times, and the industry does not feel under that stress. I think the current situation is more of a test of the non-traded BDC structure where roughly 20 percent of direct lending assets sit. And the liquidity provisions in those vehicles are designed to provide some liquidity, but not total liquidity. And so, while I think the vehicles are working as intended, obviously there's been a lot of noise. Vishy Tirupattur: So, I totally agree with you, David. The liquidity provisions that are in these structures are there for a reason; are designed to be that. It’s part of the feature and not a bug, precisely to prevent a fire sale of assets. And that really would hurt the overall system. So, we think that there’s a greater understanding of this is very much required. David Miller: I think that's right. The limitations on liquidity are there so that the vehicles can operate properly over the long run. When you have illiquid assets, you maintain some liquidity. But clearly those protections are in place so that the vehicle continue to run in ordinary fashion. I think there is a bit of a disconnect, you know, in the media between the sentiment and the fundamentals that are underlying private credit. And yeah, there are concerns about software, and macro, and unseen future risks. But right now, private credit portfolios are performing pretty well. And actually, if you look at 2025 versus [20]24, the metrics were actually improving… Vishy Tirupattur: Absolutely. I mean, we look at across various metrics, you know, in leverage and coverage metrics, we see overall trends are actually improving. Software [is] very much in focus. Fitch reported, yesterday that, uh, in the last, uh, you know, year to date there have been no software defaults. Another point I would make is there are about 5 percent defaults in – generally speaking – in the private credit space. And the default rates within the software sector is a little bit less than half of that. So, that's an important distinction to make. David Miller: Yeah, I think software is a very interesting and long topic. But generally, our view is: we think that AI is going to be a net tailwind overall for software over time. You know, even factoring in some of the erosion to the SaaS business models, I think well positioned incumbents will get their share of the upside. And so there will be some losers. We think that'll be pretty narrow. But overall, we feel very good about our software book. We've been looking at AI risk for at least three years, when we made loans. And we think that a lot of the embedded enterprise software platforms are going to be net beneficiaries of AI. Vishy Tirupattur: I have slightly different take on the software exposure and all the discussion points on this. The way I think about it is the market assumption is that AI disruption is necessarily going to disrupt all of software companies. And that disruption is imminent. I would push back on both of those points. You know, you could easily imagine that AI will lead to some disruption at some point in the future. But a necessary thing for that to happen is a significant amount ...
    Más Menos
    9 m
  • A Bull Market May Be Closer Than It Looks

    A Bull Market May Be Closer Than It Looks
    Mar 30 2026
    The stock market has already discounted many disruptions, including geopolitics, oil and AI. Our CIO and Chief U.S. Equity Strategist Mike Wilson explains why investors are now focused on one thing: whether monetary policy stays too tight for too long.Read more insights from Morgan Stanley.----- Transcript -----Welcome to Thoughts on the Market. I'm Mike Wilson, Morgan Stanley’s CIO and Chief U.S. Equity Strategist. Today on the podcast I’ll be discussing why the balance between the upside and the downside is actually better than at the start of the year. It's Monday, March 30th at 11:30 am in New York. So, let’s get after it. Everyone I’ve been speaking with lately is focused on the same things: the conflict in Iran, oil prices, and of course, AI—whether it’s CapEx, disruption of labor markets, and efficiency. When I look at how markets are trading, I come away with a different conclusion than the consensus. First, the U.S. equity market is far less complacent about growth risks than people think. Consider this: more than half of the Russell 3000 stocks are down at least 20 percent from their highs, while the S&P 500’s Price/Earnings multiple is down 17 percent. That’s not complacency. That’s a well advanced correction consistent with prior growth scares, if not an outright recession. Second, let’s talk about oil, everyone’s top concern. Historically, oil spikes have often ended business cycles. However, recessions only occurred when earnings growth was decelerating or outright negative. Today, it’s accelerating and running close to 14 percent while forward earnings growth is north of 20 percent. Meanwhile, the magnitude of the oil move, on a year-over-year basis, is only about half of what we saw in the recession outcomes. In other words, the market isn’t pricing in a recession because the odds of that happening appear low. Instead, we believe it’s pricing in continued uncertainty about oil and other key resources until there is ultimately a resolution where tanker flows resume and prices stabilize or come back down. From my observations, I think interest rates are weighing more heavily on U.S. stocks rather than oil. Specifically, the correlation between equities and yields has flipped deeply negative. Stocks are extremely sensitive to moves in higher yields—more so than they’ve been in years. This is mainly due to the recent hawkish pivot by the Fed and other central banks. As a result, we’re also approaching the 4.5 percent level on 10-year Treasury yields, a point where we typically observe further equity valuation compression. Finally, bond volatility is also rising, and equity valuations are always sensitive to that. The good news is that the Fed is more sensitive to bond than stock volatility and any further rise could likely lead to a Fed pivot back to a more dovish stance. In short, the tightening in financial conditions driven by rates and bond volatility is the bigger near-term risk, not the geopolitical backdrop. Ironically, it’s also what could provide relief. At the end of the day, I still think we’re getting closer to the end of this correction; and when I look at the next 6 to 12 months, the risk-reward looks better today than it did at the start of the year. On the positioning side, I’m also seeing some interesting shifts. Defensive stocks and Gold had a strong run from early January right up until tensions in the Middle East began at the end of February. But they have underperformed significantly since. Meanwhile, some of the better-performing sectors recently have been the more cyclical ones. That tells me the market got ahead of these concerns and may be ready to look past it, sooner than most investors. As for AI, there’s still a lot of focus on disruption, but I think the near-term story is more about efficiency and margin expansion. We’re not seeing a demand shock that would trigger a traditional labor cycle. Instead, we’re seeing companies use AI to right-size costs and improve productivity. Bottom line, the market has already done a lot of the heavy lifting of this correction by discounting the war, higher oil prices, AI, and credit risks. What it’s wrestling with now is the risk of a monetary policy mistake with central banks staying too tight for too long. If that hawkish bent starts to ease, which it probably will if bond volatility rises much further, the resumption of the bull market is likely to arrive faster than most expect. Thanks for tuning in; I hope you found it informative and useful. Let us know what you think by leaving us a review. And if you find Thoughts on the Market worthwhile, tell a friend or colleague to try it out!
    Más Menos
    5 m
  • Inside Credit Market’s Issuance Boom and Private Lending Risks

    Inside Credit Market’s Issuance Boom and Private Lending Risks
    Mar 27 2026
    Our Global Head of Fixed Income Andrew Sheets and Head of U.S. Credit Strategy Vishwas Patkar discuss what’s driving record debt issuance and growing worries about private credit.Read more insights from Morgan Stanley.----- Transcript -----Andrew Sheets: Welcome to Thoughts on the Market. I'm Andrew Sheets, Global Head of Fixed Income Research at Morgan Stanley.Vishwas Patkar: And I'm Vishwas Patkar, Head of U.S. Credit Strategy at Morgan Stanley.Andrew Sheets: And today on the program, we're going to talk about two of the biggest questions facing global credit markets. A rush of issuance and questions around private credit.It's Friday, March 27th at 2pm in London.Vishwas, it's great to have you in town, talking over what I think are two of the biggest questions that are hanging over the global credit market. A large wave of issuance and a lot of questions around a segment of that market, often known as private credit.So, let's dig into those in turn. I want to start with issuance. You know, you and your team had a pretty aggressive forecast at the start of the year, for a significant level of supply. How's that going? How is it shaping out? We're now almost through the first quarter…Vishwas Patkar: Yeah. So, we came into the year expecting a record, [$]2.25 trillion of gross issuance in investment grade. That's 25 percent higher than last year. That would mark a record one year number for investment grade. And for the high yield market, we expected about [$]400 billion of issuance; up roughly 30 percent.If I were to mark to market those, the forecast is roughly playing out as expected through mid-March. IG issuance is up about 21 percent. High yield issuance is up about 25 percent. So far at least, it's along the lines of what we'd call for. More importantly though, when I think about the drivers of the issuance, that I think in some ways is a little more validating. Because there were two big components of what was going to drive the issuance.One was AI related issuance from the large hyperscalers, and the second was a decent uptick in M&A. And we've seen both of those. So, year-to-date, we've had north of [$]80 billion of issuance from hyperscalers alone in the dollar market. That's on top of significant non-USD issuance that we've had this year.So, I think this idea of AI CapEx investments and by extension issuance being somewhat agnostic to macro, that seems to be playing out so far.Andrew Sheets: So, let's talk a little bit more about that – because, you know, this is a new development. This kind of is a new regime to have this much supply, sort of, somewhat independent of a very volatile macro backdrop.And you know, maybe if you could talk just a little bit more about what we're learning about the issuers. What do they care about? What is bringing them to market? And then maybe what would cause them to slow down or speed up?Vishwas Patkar: Yeah, I think we've learned a couple of things, right? First is – this issuance is being driven by investments that are not opportunistic, right? They are competitive in nature. Clearly there is an arms race to figure out who will win the AI race.I think a second leg of it is the issuance is somewhat spread agnostic. So, you know, in credit we look at this metric called new issue concessions, which is effectively how much is a company paying in terms of excess funding costs relative to their bonds outstanding. And what we've seen with some of the larger deals is that new issue concessions are well above average.And that's pretty important in the grand scheme of things because, you know, we're talking about one sector that is driving AI infrastructure. But when you have issuance that comes in size, and it comes wide to where existing bonds are, we think that has knock-on effects repricing other companies that are downstream of those names.Andrew Sheets: So, we have a market for issuing corporate debt that's pretty wide open. You know, as you mentioned, very high levels of issuance and supply going through, despite what would've been a lot of concerns. And one of those concerns is the conflict in Iran.But another concern that's been cropping up is a concern around this market often known as private credit where you've seen a lot of focus, a lot of headlines, volatility in some of the managers of private credit. But also, I think this is an area where less is known. And where there's still a lot of confusion about what it is and how it's performing.So, for the second set of questions, Vishwas, maybe we could just start with, you know, when you think about private credit, what is it to you? And how do you break up the market?Vishwas Patkar: Yeah, so I think at a very high level, you can think about private credit as capital that is provided by non-bank lenders. And in some ways – that is not broadly syndicated. So it's different from investment grade bonds or high yield bonds or leverage loans in that respect. You know, the second factor I laid out.You ...
    Más Menos
    11 m
Todavía no hay opiniones