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What’s the Reward for Taking Equity Risk Right Now?

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What’s in Today’s Report:

  • What’s the Reward for Taking Equity Risk Right Now?
  • Jobless Claims Takeaways – Initial Claims Plunge to Multi-Decade Lows

Futures are tentatively higher following yesterday’s biggest stock market selloff of July with oil down 2%-3% amid quiet geopolitical news while global PMI data beat estimates.

Economic data overnight was strong with U.K. Retail Sales jumping 4.2% vs. (E) 2.0% y/y while the EU Composite Flash PMI firmed from 50.0 to 51.9 vs. (E) 50.1 in July.

Looking ahead to today’s session, there are two notable releases to watch in the U.S., the July PMI Composite Flash (E: 54.2) and New Home Sales (E: 613K) for June.

There are no Fed speakers or Treasury auctions today so investors will be looking for Goldilocks data (resilient, steady growth and cooling inflation trends) and easing geopolitical tensions in order for this morning’s rebound to hold.

Finally, earnings season continues today with noteworthy companies reporting Q2 results including: VZ ($1.27), AXP ($4.41), NEE ($1.08), CHTR ($9.66), and HCA ($7.57).

 

Equity Risk Premium Hits 2007 Levels

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What’s in Today’s Report:

  • Equity Risk Premium at 2007 Levels
  • February Composite PMI Flash Takeaways
  • Why Are Rising Rates Causing Stocks to Drop Now?
  • S&P 500 Chart: Trend Support From the October Lows In Focus

U.S. equity futures are little changed this morning following yesterday’s steep losses as Treasuries have stabilized ahead of today’s Fed meeting minutes release.

Economically, German CPI met estimates at 8.7% y/y but that remains a historically very high reading which continues to warrant aggressive policy from the ECB in the months ahead.

Looking into today’s session, there are no notable economic reports which will leave investors primarily focused on the FOMC meeting minutes release (2:00 p.m. ET). Before that release, the Treasury will hold a 5-Yr Note auction at 1:00 p.m. ET which could move bond markets, and if we see new highs in yields, expect additional pressure on stocks.

Finally, the Fed’s Williams speaks after the close at 5:30 p.m. ET and his comments could move markets in after-hours trading if he is materially hawkish.