Stocks Slightly Lower into Afternoon on US Policy-Induced Stagflation Fears, Earnings Outlook Worries, Technical Selling, Regional Bank/Tech Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Performing In-Line
  

Equity Investor Angst:

• Volatility(VIX) 17.2 +2.4%
• DJIA Intraday % Swing .49%
  
• Bloomberg Global Risk On/Risk Off Index 56.9 -.7%

• Euro/Yen Carry Return Index 155.06 +.64%

• Emerging Markets Currency Volatility(VXY) 9.9 -.7%

• CBOE S&P 500 Implied Correlation Index 33.6 +1.6% 

• ISE Sentiment Index 101.0 +13.0 points
  

• Total Put/Call .96 +5.5%

• NYSE Arms 1.06 -9.3%

Credit Investor Angst:

• North American Investment Grade CDS Index 76.1 -.29%
  

• US Energy High-Yield OAS 376.79 +.41%
• Bloomberg TRACE # Distressed Bonds Traded 403.0 -20
  

• European Financial Sector CDS Index 96.64 +.28% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 350.64 -.48%
  

• Italian/German 10Y Yld Spread 187.0 basis basis points unch.
  

• Asia Ex-Japan Investment Grade CDS Index 128.1 +.8%
  

• Emerging Market CDS Index 243.76 +1.0%
  

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

• 2-Year Swap Spread 27.25 basis points -.5 basis point
  

• TED Spread 23.75 basis points +3.0 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -18.25 -.75 basis point
  
• MBS  5/10 Treasury Spread 160.0 -4.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 692.0 -1.0 basis point
  
• Avg. Auto ABS OAS 94.0 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 47.7 +.08%
• 3-Month T-Bill Yield 4.99% -6.0 basis points
  

• China Iron Ore Spot 103.5 USD/Metric Tonne -.39%
• Dutch TTF Nat Gas(European benchmark) 39.9 euros/megawatt-hour -.6%

• Citi US Economic Surprise Index 27.3 -4.8 points

• Citi Eurozone Economic Surprise Index 30.6 -2.2 points
  

• Citi Emerging Markets Economic Surprise Index 31.4 -.4 point
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 225.93 unch.:  Growth Rate +1.5% -.1 percentage point, P/E 18.3 unch.
  
• S&P 500 Current Year Estimated Profit Margin 12.25% -2.0 basis points
  
• Bloomberg US Financial Conditions Index -.01 -6.0 basis point
• Bloomberg Euro-Zone Financial Conditions Index -4.36 -8.0 basis points
  
• US Yield Curve -63.25 basis points (2s/10s) -1.25 basis points
• US Atlanta Fed 1Q GDPNow Forecast +2.48% unch.
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +4.58% unch.: CPI YoY +5.17% unch.
  
• 10-Year TIPS Spread 2.28 unch.
  
• Highest target rate probability for June 14th FOMC meeting: 67.9%(-.7 percentage point) chance of 5.0%-5.25%. Highest target rate probability for July 26th meeting: 58.5%(-2.3 percentage points) chance of 5.0%-5.25%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +116 open in Japan 
• China A50 Futures: Indicating -6 open in China

• DAX Futures: Indicating +129 open in Germany

Portfolio:

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

• Disclosed Trades:  None
  

• Market Exposure: 50% Net Long