Stocks Falling into Final Hour on US Policy-Induced Stagflation Fears, Regional Bank Contagion Concerns, Earnings Outlook Worries, Financial/Transport Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Almost Every Sector Declining
  

• Volume: Around Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 19.5 +15.4%
• DJIA Intraday % Swing 1.0%
  
• Bloomberg Global Risk On/Risk Off Index 53.3 -6.5%

• Euro/Yen Carry Return Index 153.2 -1.2%

• Emerging Markets Currency Volatility(VXY) 10.0 +1.1%

• CBOE S&P 500 Implied Correlation Index 37.6 +13.0% 

• ISE Sentiment Index 79.0 -18.0 points
  

• Total Put/Call 1.01 +8.6%

• NYSE Arms 1.60 +51.9%

Credit Investor Angst:

• North American Investment Grade CDS Index 78.6 +3.6%
  

• US Energy High-Yield OAS 396.97 +4.7%
• Bloomberg TRACE # Distressed Bonds Traded 406.0 +3
  

• European Financial Sector CDS Index 98.45 +2.1% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 352.3 +.5%
  

• Italian/German 10Y Yld Spread 187.0 basis points +2.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 128.9 +.8%
  

• Emerging Market CDS Index 244.94 +1.9%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 26.8 -.19%

• 2-Year Swap Spread 26.5 basis points -.75 basis point
  

• TED Spread 22.5 basis points -1.25 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -20.0 -1.75 basis points
  
• MBS  5/10 Treasury Spread 166.0 +6.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 693.0 +1.0 basis point
  
• Avg. Auto ABS OAS 95.0 +1.0 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 47.6 -.31%
• 3-Month T-Bill Yield 5.02% +3.0 basis points
  

• China Iron Ore Spot 100.9 USD/Metric Tonne -1.6%
• Dutch TTF Nat Gas(European benchmark) 39.8 euros/megawatt-hour -.23%

• Citi US Economic Surprise Index 25.1 -2.2 points

• Citi Eurozone Economic Surprise Index 30.0 -.6 point
  

• Citi Emerging Markets Economic Surprise Index 29.4 -2.0 points
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 225.92 -.01:  Growth Rate +1.5% unch., P/E 18.2 -.1
  
• S&P 500 Current Year Estimated Profit Margin 12.25% unch.
  
• Bloomberg US Financial Conditions Index -.23 -18.0 basis point
• Bloomberg Euro-Zone Financial Conditions Index -4.39 -3.0 basis points
  
• US Yield Curve -56.0 basis points (2s/10s) +7.25 basis points
• US Atlanta Fed 1Q GDPNow Forecast +2.48% unch.
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +4.58% unch.: CPI YoY +5.19% +2.0 basis points
  
• 10-Year TIPS Spread 2.25 -3.0 basis points
  
• Highest target rate probability for June 14th FOMC meeting: 71.6%(+3.2 percentage points) chance of 5.0%-5.25%. Highest target rate probability for July 26th meeting: 47.0%(-12.7 percentage points) chance of 5.0%-5.25%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -195 open in Japan 
• China A50 Futures: Indicating -76 open in China

• DAX Futures: Indicating +49 open in Germany

Portfolio:

• Higher:  On gains in my utility sector longs, index hedges and emerging market shorts
  

• Disclosed Trades:  Added to my (IWM)/(QQQ) hedges
  

• Market Exposure: Moved to Market Neutral