U.S. Futures & World Markets

Stocks are lower premarket as investors go a little more risk-off with Brent crude hitting $100 per barrel. Headlines out of Iran did little to ease concerns that oil prices are headed lower anytime soon.

Tech stocks have held up fairly well, as AI demand continues to help the group outperform. With so many uncertainties floating around, it's almost as if the rotation into tech stocks is the "safe haven" trade. If other parts of the economy remain vulnerable to higher oil prices and impending rate hikes, why not hide out in names with stable and growing earnings?

Nick Colas of DataTrek Research on current valuations: the S&P 500 has a valuation problem. Earnings have been strong all year, but the index's multiple continues to shrink. On the plus side, reasonable expected 1-year returns (+7–8%) no longer require anything other than stable multiples and inline earnings reports. Anything more likely needs lower oil prices and/or clarity on AI CapEx returns.

S&P Futures vs. Fair Value: -5.00  |  10-Year Yield: 4.80%

CORE Headlines

Charts & Data

While inflation expectations were steady/down in August, the share of consumers expecting higher unemployment a year from now rose to the highest since April 2020. NY Fed via Daily Chartbook.

The US is currently exhibiting classic mid-cycle dynamics — current conditions almost exactly mirror 1997 when the Greenspan Fed enacted a single tap-on-the-brakes rate hike. @steve_donze via Daily Chartbook.

Speculative positioning in gold has reversed sharply. Goldman still sees prices reaching $4,900/oz by year-end. Goldman via Daily Chartbook.

Consolidated equity positioning at the 65th percentile — modestly overweight but well below crowded, leaving room to add risk. Deutsche Bank via Daily Chartbook.

The US Equity Risk Indicator is flashing red — history shows that once this metric hits extreme levels, significant equity drawdowns often follow. BCA Research via Daily Chartbook.

Realized correlation across SPX over the last six months is 11 — only two periods in the last 25 years have seen correlations this low: Feb 2007 (just before the housing crisis) and Jan 2018 (just before 'volmageddon'). Levels this low are not sustainable. Goldman via Daily Chartbook.

S&P 500 stocks above their 50-day moving average sits at 43% — the lowest since April 7. @_joshschafer via Daily Chartbook.

During the last 76 months, US stocks have outperformed US bonds by an almost 28% average annualized pace — the biggest such outperformance in 100 years. Jim Paulsen via Daily Chartbook.

Forward P/E over forward profit margins approaching lows previously reserved for the depths of the US and European financial crises. Tony Pasquariello, Goldman via Daily Chartbook.

Forward profit margin at 16.6%, 2027 consensus at 16.8%. Both continue to hit record highs. Yardeni Research via Daily Chartbook.

Citi's US Earnings Revisions Index has been positive for 21 straight weeks — longest since September 2021. @kevrgordon via Daily Chartbook.

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