U.S. Equity Risk Premium – Long-Term View Should investors approach U.S. equities with caution due to the significant decline in the equity risk premium, which stands well below its historical average? Image: Topdown Charts
S&P 500 Equity Risk Premium The current multi-decade lows of the S&P 500 equity risk premium suggest that bonds are relatively more attractive than equities. Image: Morgan Stanley Research
Global Market Implied Equity Risk Premiums Equity risk premiums continue to decline fast, particulary in the United States. Image: Goldman Sachs Global Investment Research
S&P 500 Valuations – Combined P/E Ratio and Equity Risk Premium Given the S&P 500’s high P/E ratio, should investors be cautious about U.S. equities? And do they receive adequate compensation for the risk associated with owning U.S. equities rather than bonds? Image: Topdown Charts
S&P 500 Equity Risk Premium The equity risk premium suggests that U.S. Treasury bonds may look more attractive relative to U.S. equities. Image: BofA US Equity & Quant Strategy
PMI vs. Equity Risk Premium The divergence between the ISM PMI and the equity risk premium is significant. Image: Morgan Stanley Research
Valuation – S&P 500 P/E, S&P Equity Risk Premium and U.S. 10-Year Treasury Yields Significant multiple expansion in the absence of a corresponding increase in earnings growth can generally be a warning sign that U.S. stocks are getting too expensive. Image: Morgan Stanley Research
Stocks – MSCI EMU Earnings Yield Minus Real 10-Year Bund Yield (Equity Risk Premium) The equity risk premium below its 10-year average does not bode well for eurozone stocks. Image: Gavekal, Macrobond
U.S. Equity Risk Premium vs. ISM Manufacturing and ISM Services The equity risk premium is likely to rise if a U.S. recession occurs this year. Image: Goldman Sachs Global Investment Research
12-Month Forward S&P 500 Equity Risk Premium The equity risk premium should rise as a recession is likely in the United States. Image: BCA Research