Stocks Slightly Lower into Afternoon on US Policy-Induced Stagflation Fears, Rising Fed Rate-Hike Odds, Escalating China/Taiwan Tensions, Tech/Biotech Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: About Even
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 19.2 +4.1%
• DJIA Intraday % Swing .60%
  
• Bloomberg Global Risk On/Risk Off Index 53.1 +1.1%

• Euro/Yen Carry Return Index 151.4 +.6%

• Emerging Markets Currency Volatility(VXY) 11.6 -.26%

• CBOE S&P 500 Implied Correlation Index 33.2 -.75% 

• ISE Sentiment Index 99.0 -6.0 points
  

• Total Put/Call .93 -7.0%

• NYSE Arms .97 +1.0%

Credit Investor Angst:

• North American Investment Grade CDS Index 78.4 +.02%
  

• US Energy High-Yield OAS 379.4 -3.3%
• Bloomberg TRACE # Distressed Bonds Traded 425.0 -15
  

• European Financial Sector CDS Index 104.66 +.13% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 413.8 +.01%
  

• Italian/German 10Y Yld Spread 185.0 basis basis points unch.
  

• Asia Ex-Japan Investment Grade CDS Index 132.5 +.11%
  

• Emerging Market CDS Index 242.67 +.21%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 26.8 -.32%

• 2-Year Swap Spread 33.25 basis points +.25 basis point
  

• TED Spread 44.5 basis points -3.5 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -19.25 unch.
  
• MBS  5/10 Treasury Spread 165.0 +7.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 689.0 +2.0 basis points
  
• Avg. Auto ABS OAS 93.0 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 47.55 -.31%
• 3-Month T-Bill Yield 4.97% +19.0 basis points
  

• China Iron Ore Spot 116.8 USD/Metric Tonne -.6%
• Dutch TTF Nat Gas(European benchmark) 43.1 euros/megawatt-hour unch.

• Citi US Economic Surprise Index 30.3 -1.1 points

• Citi Eurozone Economic Surprise Index 52.3 -4.2 points
  

• Citi Emerging Markets Economic Surprise Index 25.5 -.2 point
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 226.05 -.01:  Growth Rate +1.6% unch., P/E 18.2 +.1
  
• S&P 500 Current Year Estimated Profit Margin 12.29% unch.
  
• Bloomberg US Financial Conditions Index -.07 +23.0 basis points
• Bloomberg Euro-Zone Financial Conditions Index -4.07 +1.0 basis point
  
• US Yield Curve -59.25 basis points (2s/10s) -6.0 basis points
• US Atlanta Fed 1Q GDPNow Forecast +2.17% +70.0 basis points
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +4.60% unch.: CPI YoY +5.22% unch.
  
• 10-Year TIPS Spread 2.28 +3.0 basis points
  
• Highest target rate probability for June 14th FOMC meeting: 68.7%(-1.0 percentage point) chance of 5.0%-5.25%. Highest target rate probability for July 26th meeting: 44.5%(-4.1 percentage points) chance of 4.75%-5.0%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +232 open in Japan 
• China A50 Futures: Indicating +20 open in China

• DAX Futures: Indicating +134 open in Germany

Portfolio:

• Higher:  On gains in my industrial/tech sector longs and emerging market shorts
  

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

• Market Exposure: Moved to 75% Net Long