Bloomberg Intelligence's 'Equity Market Minute' 9/11/2019

Gina Martin Adams discusses the current state of the equity market, highlighting investor concerns about a potential recession. She explains that the equity risk premium is at a historically high level, indicating risk intolerance similar to past crises. Additionally, the premium for defensiveness in the market is significantly elevated, reflecting a preference for stable stocks. The analysis suggests that an economic growth surprise could positively impact stocks in the coming year.

What is the current sentiment among investors regarding a potential recession?

• Investors are indifferent to economic indicators.

• Recession fears are not affecting stock prices.

• Recession is a major concern and is priced into stocks.

• Investors are optimistic about economic growth.

What does the equity risk premium represent?

• The difference between stock earnings yield and 10-year treasury bond yield.

• The total return of the stock market over a decade.

• The average dividend yield of S&P 500 companies.

• The interest rate set by the Federal Reserve.

Historically, when has the equity risk premium reached levels similar to the current one?

• During the dot-com bubble.

• In the 70s and 80s extreme recession periods.

• During periods of economic boom.

• In the early 2000s housing market crash.

What is the premium for defensiveness in the equity market currently?

• About 30%

• About 20%

• About 10%

• About 40%

To which historical period does the current premium for defensiveness compare?

• The 1990-91 recession.

• The 2000 dot-com bubble.

• The 2008 financial crisis.

• The 2011 debt crisis.