Stocks Lower into Afternoon on US Policy-Induced Stagflation Fears, Regional Bank Contagion Worries, European/Emerging Markets/US High-Yield Debt Angst, Tech/Alt Energy Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume:  Around Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 19.6 +3.3%
• DJIA Intraday % Swing .5%
  
• Bloomberg Global Risk On/Risk Off Index 52.9 -1.5%

• Euro/Yen Carry Return Index 1549.3 -.9%

• Emerging Markets Currency Volatility(VXY) 11.7 unch.

• CBOE S&P 500 Implied Correlation Index 34.5 +2.5% 

• ISE Sentiment Index 102.0 +4.0 points
  

• Total Put/Call .94 -15.3%

• NYSE Arms 1.04 -16.1%

Credit Investor Angst:

• North American Investment Grade CDS Index 80.62 +3.5%
  

• US Energy High-Yield OAS 401.7 +3.5%
• Bloomberg TRACE # Distressed Bonds Traded 445.0 +3
  

• European Financial Sector CDS Index 107.2 +4.6% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 422.7 +7.3%
  

• Italian/German 10Y Yld Spread 183.0 basis basis points -4.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 130.0 +.8%
  

• Emerging Market CDS Index 241.3 +2.3%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 26.97 +.06%

• 2-Year Swap Spread 32.0 basis points -1.75 basis points
  

• TED Spread 48.25 basis points -13.25 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -19.0 -4.25 basis points
  
• MBS  5/10 Treasury Spread 152.0 -1.0 basis point
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 689.0 +3.0 basis points
  
• Avg. Auto ABS OAS 94.0 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 47.8 -.20%
• 3-Month T-Bill Yield 4.79% +7.0 basis points
  

• China Iron Ore Spot 117.25 USD/Metric Tonne -.51%
• Dutch TTF Nat Gas(European benchmark) 44.6 euros/megawatt-hour -4.3%

• Citi US Economic Surprise Index 47.3 -.8 point

• Citi Eurozone Economic Surprise Index 53.8 +7.0 points
  

• Citi Emerging Markets Economic Surprise Index 25.5 +.1 point
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 226.14 +.03:  Growth Rate +1.7% unch., P/E 18.1 unch.
  
• S&P 500 Current Year Estimated Profit Margin 12.29% unch.
  
• Bloomberg US Financial Conditions Index -.46 -2.0 basis points
• Bloomberg Euro-Zone Financial Conditions Index -4.02 -7.0 basis points
  
• US Yield Curve -47.25 basis points (2s/10s) +4.0 basis points
• US Atlanta Fed 1Q GDPNow Forecast +1.47% -24.0 basis points
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +4.60% unch.: CPI YoY +5.22% unch.
  
• 10-Year TIPS Spread 2.25 -2.0 basis points
  
• Highest target rate probability for June 14th FOMC meeting: 56.1%(+2.7 percentage points) chance of 4.75%-5.0%. Highest target rate probability for July 26th meeting: 46.4%(+8.6 percentage points) chance of 4.5%-4.75%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -130 open in Japan 
• China A50 Futures: Indicating +13 open in China

• DAX Futures: Indicating +139 open in Germany

Portfolio:

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

• Disclosed Trades:  None
  

• Market Exposure: 25% Net Long