By Scott Hallermann.

Key macro-economic data continues to signal elevated near to intermediate term recession risks. In my opinion, much of the risks are reflected in bank stock prices while the broader equity market carries a much smaller equity risk premium compared with a year ago from an expanded market multiple and higher risk free rates.

Economic updates from last week included the S&P Global flash PMI numbers for June (June 23) and The Conference Board May U.S. Leading Indicators (LEI) (June 22). June PMI numbers show an economy in which the Services sector is modestly expanding but the Manufacturing sector is contracting once again. The report commented (my emphasis), “The overall rate of expansion of business activity in the US remained robust in June, consistent with GDP rising at a rate of 1.7% to put second quarter growth in the region of 2%.

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