Summary of Key Points from Conference Call Industry Overview - **US Manufacturing and Services PMI**: The S&P US Manufacturing PMI for June recorded at 52, exceeding expectations of 51, while the Services PMI was at 53.1, slightly below the expected 53 and previous value of 53.7 [1][2] Core Insights - **US Existing Home Sales**: In May, existing home sales increased by 0.8% month-over-month, contrary to expectations of a 1.3% decline. This marks the weakest sales pace for May since 2009. Inventory rose by 6.2% to 1.54 million units, the highest level in five years [3][4] - **Stock Market Volatility**: The implied volatility of the S&P 500 increased in July, particularly on July 3, ahead of the June non-farm payroll data release [6][7] - **Geopolitical Risk and Oil Prices**: Goldman Sachs estimates a geopolitical risk premium of $12 per barrel for oil prices. If oil flows through the Strait of Hormuz drop by half for a month, Brent crude could reach $110 per barrel. China is identified as the main destination for oil flows from this region [9][10][17] - **Impact of Oil Price Surge**: JPMorgan reports that most geopolitical-driven sell-offs are temporary. Historical data shows that after geopolitical risk events, the S&P 500 index typically rises by 2%, 3%, and 9% over the next 1, 3, and 12 months, respectively [18][19] Additional Important Information - **S&P 500 Earnings Expectations**: The earnings per share (EPS) forecast for the S&P 500 has reached a historical high, now exceeding $281 for the next twelve months [23] - **Japanese Bond Market**: Long-term bond yields in Japan have eased from record highs as the government plans to reduce bond issuance more than previously expected [24][25] - **Inflation Drivers**: Research from the Federal Reserve indicates that low inflation post-financial crisis was primarily supply-driven, while high inflation during the pandemic was more demand-driven. Since mid-2022, both demand and supply contributions to inflation have significantly decreased [30][32]