Stocks Slightly Lower into Afternoon on Rising European/Emerging Markets/US High-Yield Debt Angst, US Policy-Induced Stagflation Fears, Tightening Global Financial Conditions, Tech/Alt Energy Sector Weakness

 Broad Equity Market Tone:

• Advance/Decline Line: Modestly Lower
  

• Sector Performance: Mixed
  

• Volume:  Above Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 22.9 +1.4%
• DJIA Intraday % Swing 1.11%
  
• Bloomberg Global Risk On/Risk Off Index 46.2 -.9%

• Euro/Yen Carry Return Index 146.9 -.66%

• Emerging Markets Currency Volatility(VXY) 11.8 +.1%

• CBOE S&P 500 Implied Correlation Index 39.2 -.7% 

• ISE Sentiment Index 81.0 +3.0 points
  

• Total Put/Call 1.07 -3.6%

• NYSE Arms 1.01 -10.6%

Credit Investor Angst:

• North American Investment Grade CDS Index 86.4 +.6%
  

• US Energy High-Yield OAS 458.1 +2.1%
• Bloomberg TRACE # Distressed Bonds Traded 449.0 +9
  

• European Financial Sector CDS Index 117.32 +2.8% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 496.6 +1.8%
  

• Italian/German 10Y Yld Spread 188.0 basis basis points +1.0 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 145.4 +4.5%
  

• Emerging Market CDS Index 255.0 -.9%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 26.8 -.2%

• 2-Year Swap Spread 32.0 basis points +.25 basis point
  

• TED Spread 53.5 basis points +16.5 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -25.25 -7.0 basis points
  
• MBS  5/10 Treasury Spread  157.0 +5.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 656.0 +7.0 basis points
  
• Avg. Auto ABS OAS 90.0 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 47.6 -.2%
• 3-Month T-Bill Yield 4.60% -1.0 basis point
  

• China Iron Ore Spot 118.2 USD/Metric Tonne -1.2%
• Dutch TTF Nat Gas(European benchmark) 41.1 euros/megawatt-hour -4.8%

• Citi US Economic Surprise Index 61.2 +9.9 points

• Citi Eurozone Economic Surprise Index 52.6 +8.6 points
  

• Citi Emerging Markets Economic Surprise Index 20.2 -.4 point
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 226.23 +.03:  Growth Rate +1.7% unch., P/E 17.5 -.2
  
• S&P 500 Current Year Estimated Profit Margin 12.34% +4.0 basis points
  
• Bloomberg US Financial Conditions Index -.86 -16.0 basis points
  
• Yield Curve -40.0 basis points (2s/10s) +2.5 basis points
• US Atlanta Fed 1Q GDPNow Forecast +3.19% -6.0 basis points
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +4.73% unch.: CPI YoY +5.22% unch.
  
• 10-Year TIPS Spread 2.23 -4.0 basis points
  
• Highest target rate probability for June 14th FOMC meeting: 64.8%(+10.9 percentage points) chance of 4.75%-5.0%. Highest target rate probability for July 26th meeting: 58.7%(+10.1 percentage points) chance of 4.50%-4.75%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -275 open in Japan 
• China A50 Futures: Indicating +9 open in China

• DAX Futures: Indicating +187 open in Germany

Portfolio:

• Higher:  On gains in my utility/medical sector longs and emerging market shorts
  

• Disclosed Trades:  Covered some of my (IWM)/(QQQ) hedges
  

• Market Exposure: Moved to 50% Net Long