Stocks Reversing Lower into Afternoon on US Policy-Induced Stagflation Fears, Fed "Higher for Longer" Worries, Dollar Strength, Energy/Tech Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Modestly Higher
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 17.2 +.9%
• DJIA Intraday % Swing .36%
  
• Bloomberg Global Risk On/Risk Off Index 58.2 +1.5%

• Euro/Yen Carry Return Index 153.3 -.3%

• Emerging Markets Currency Volatility(VXY) 10.0 -.20%

• CBOE S&P 500 Implied Correlation Index 31.6 -.4% 

• ISE Sentiment Index 103.0 +11.0 points
  

• Total Put/Call 1.03 +14.4%

• NYSE Arms .95 +10.5%

Credit Investor Angst:

• North American Investment Grade CDS Index 74.7 +.91%
  

• US Energy High-Yield OAS 362.91 +.24%
• Bloomberg TRACE # Distressed Bonds Traded 366.0 -1
  

• European Financial Sector CDS Index 94.7 -.39% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 355.1 -2.4%
  

• Italian/German 10Y Yld Spread 183.0 basis basis points -3.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 122.3 -1.8%
  

• Emerging Market CDS Index 233.3 +.66%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 26.99 +.03%

• 2-Year Swap Spread 30.0 basis points -1.5 basis points
  

• TED Spread 27.75 basis points +2.75 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -15.5 +1.0 basis point
  
• MBS  5/10 Treasury Spread 164.0 +2.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 693.0 -1.0 basis point
  
• Avg. Auto ABS OAS 95.0 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 47.7 -.35%
• 3-Month T-Bill Yield 5.05% +5.0 basis points
  

• China Iron Ore Spot 117.0 USD/Metric Tonne +.2%
• Dutch TTF Nat Gas(European benchmark) 41.1 euros/megawatt-hour -.05%

• Citi US Economic Surprise Index 39.1 +8.1 points

• Citi Eurozone Economic Surprise Index 43.8 -4.6 points
  

• Citi Emerging Markets Economic Surprise Index 23.9 -3.9 points
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 225.98 +.15:  Growth Rate +1.6% +.1 percentage point, P/E 18.3 -.1
  
• S&P 500 Current Year Estimated Profit Margin 12.26% unch.
  
• Bloomberg US Financial Conditions Index .25 +8.0 basis points
• Bloomberg Euro-Zone Financial Conditions Index -4.13 -17.0 basis points
  
• US Yield Curve -61.0 basis points (2s/10s) -3.25 basis points
• US Atlanta Fed 1Q GDPNow Forecast +2.47% +30.0 basis points
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +4.58% unch.: CPI YoY +5.12% unch.
  
• 10-Year TIPS Spread 2.31 unch.
  
• Highest target rate probability for June 14th FOMC meeting: 64.0%(-2.1 percentage points) chance of 5.0%-5.25%. Highest target rate probability for July 26th meeting: 53.7%(+6.0 percentage points) chance of 5.0%-5.25%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +3 open in Japan 
• China A50 Futures: Indicating -19 open in China

• DAX Futures: Indicating +121 open in Germany

Portfolio:

• Slightly Higher:  On gains in my medical/industrial sector longs and index hedges
  

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

• Market Exposure: Moved to 25% Net Long