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Welcome to Thoughts on the Market. I'm Mike Wilson, Morgan Stanley CIO and chief U.S. equity strategist. Today on the podcast, I'll be discussing why I remain bullish even after such a strong run in stocks. It's Monday, April 27th at 11:30am in New York, so let's get after it. The US equity market just experienced one of the most dramatic bounces in history. From a technical standpoint, it went from oversold to overbought territory in just 12 days. Based on our conversations, the speed of this move has left some to express caution about the near term path of equities, but that's the way it usually works. The market waits for no one once it decides to move on. From our perspective, this feels like last year. Many investors are contemplating the lagging impacts of higher commodity prices on inflation, just like they were thinking through the effects of higher tariff rates a year ago. Many companies will feel the downstream impacts on a lagging basis, but we believe equity indices and many subgroups already suffered enough damage to account for these concerns. In other words, the equity market isn't simply looking past the risks it already priced them. Take into consideration that the earnings picture is much stronger today with forward 12 month earnings growth approaching 25% versus just 9% a year ago as well. We still hear many commentators suggesting that growth is only coming from a handful of stocks. While mathematically that's a fair point for the top heavy S&P 500, it doesn't acknowledge that forward earnings growth for the median company and for small caps is also well into the double digits. This cadence is very different from the prior three to four years when the economy was experiencing a rolling recession. It also supports our rolling recovery and broadening thesis that we laid out a year ago. So far, first quarter earnings season has delivered a 10% beat rate. In aggregate, this is two times the long term average. More importantly, second quarter and forward 12 month company guidance have increased by an additional 2 to 3%. Besides earnings beat rates and guidance, we're also watching CapEx guidance and signs of pricing power. We enter 2026 with a view that the CapEx cycle was gaining momentum thanks to three tailwinds. First, strong earnings and cash flow which tend to correlate with capex. Second, tax incentives from the big beautiful bill and third, strong demand from the AI buildout and reshoring of manufacturing. Early indications on this front are supportive. With the median stock capex growth running almost 10% and our factor work continuing to show that the market is rewarding high capex, it's important to see these trends continue as the quarter progresses, especially this week when the hyperscalers are scheduled to report another point. Given potential downstream cost headwinds from the Iran war, we want to see pricing power and top line durability persist. Early indications here are also supportive, with sales surprise for the S&P 500 running well above average and close to 2%. Finally, as noted on prior podcasts, one of the last hurdles for the market to overcome was the Fed's recent hawkish pivot on higher oil prices and the transition of its leadership from Jay Powell to Fed Chair nominee Kevin Warsh. This past week, Kevin Warsh appeared in front of the Senate. He signaled some caution on near term rate cuts, noting that the inflation risks are not resolved. He also reiterated his well established criticism of the Fed's historic willingness to intervene in markets and the economy too aggressively with its balance sheet. Every Fed chair transition typically requires a learning period for the markets where they test the new chair's resolve and figure out how to interpret his or her communication style. This time should be no different and could lead to some corrective price action in the near term caused by short spikes in bond volatility or stress in funding markets. In my view, the treasury and Fed will be able to manage these risks in the end, leaving the bull market intact. 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.