US EARLY MORNING: Index futures are around flat ahead of mega-cap earnings

US PRE-MARKETS: US index futures are trading around neutral ahead of today's heavy earnings docket, which includes the likes of Microsoft (MSFT) and Alphabet (GOOG). Treasury yields are wider, with the belly underperforming, though the magnitude of losses is not great. Traders will also be cognizant of the FOMC meeting on Wednesday, ECB meeting on Thursday, and Friday's BoJ meeting; additionally, we also get the US advanced GDP numbers for Q2 on Thursday; and on Friday, we'll see the release of the PCE inflation data, which is said to be the Fed's preferred gauge, as well as the Employment Cost Index - these data will not be released ahead of the Wednesday Fed decision (base case is +25bps rate rise, our preview is here), but may shape expectations of where the Fed's terminal rate will end up.

MS, JPM US EQUITY OUTLOOKS: Morgan Stanley's US equity strategist Mike Wilson admitted the bank was wrong in sticking with pessimism on equities for too long. Wilson said MS underestimated the rally in 2023, as the S&P 500 surged despite falling profits, and its forecast for the S&P 500 at 3,900 was left behind as the index topped 4,500. The bank now sees the index at around 4,200 by June 2024, though they remain cautious on corporate earnings power due to softening inflation. There are no signs of such a mea culpa from JPMorgan's strategist Marko Kolanovic, who remains bearish on equities despite the market rally. He warned that aggressive interest-rate hikes by central banks, decreasing consumer savings, and geopolitical concerns could lead to market declines and increased volatility. Despite the current market surge and optimism, Kolanovic believes that macroeconomic indicators will eventually reflect the impact of monetary tightening. He sees the recent market gains as a result of "mechanical re-risking" and warns of a potential bubble, expressing caution about the future outlook.

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25 Jul 2023 - 09:30- EquitiesData- Source: Newsquawk

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