Biggest Downside Risk to the U.S. Dollar over the Next 6 Months The U.S. dollar is considered to be most vulnerable to the downside risk of a hard landing scenario, which is widely regarded as the primary concern that could negatively impact its value. Image: BofA Global Research
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
Sentiment – Global PMI and Risk Appetite Indicator The GS risk appetite indicator remaining elevated suggests that investors have a high appetite for risk in the financial markets. Image: Goldman Sachs Global Investment Research
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
FMS Financial Market Stability Risks Index vs. S&P 500 Financial market stability risks continue to weigh on the S&P 500. Image: BofA Global Fund Manager Survey
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
S&P 500 Equity Risk Premium – Consensus Bottoms Up Earnings Yield – 10-Year Treasury Yield Can U.S. Treasury bonds be considered more attractive than U.S. stocks at present? Image: Morgan Stanley Research
Equity Risk Premium – Change in ERP vs. 24-Month Lows Will the equity risk premium rise in 2023 as a U.S. recession is likely? Image: BofA US Equity & Quant Strategy