The market prefers longer-term better control of the virus and so more lockdowns can be fine as they result in a better long-term outcome and so if you don’t lock down sufficiently, it will create more volatility for markets long-term.

As we look towards the end of the year and into next year, uncertainty should ultimately recede. By December we should know more about the progress of a vaccine and we should know more about who’s the next President of the United States.

As uncertainty recedes into the end of this years and into next, we will see more pro-cyclical early cycle rotation in markets. Small caps will outperform large caps, and cyclicals outperforming defensives.

Morgan Stanley’s chief cross-asset strategist Andrew Sheets discusses the outlook for equities, fixed income and market volatility amid continued uncertainty surrounding U.S. economic stimulus, the timing on a coronavirus vaccine and the outcome of the presidential election. He speaks on “Bloomberg Surveillance.”


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