Stocks Falling into Afternoon on US Policy-Induced Stagflation Fears, Rising Consumer Inflation Expectations, Dollar Strength, Consumer Discretionary/Bank Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Almost Every Sector Declining
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 17.6 +4.0%
• DJIA Intraday % Swing .73%
  
• Bloomberg Global Risk On/Risk Off Index 52.6 +4%

• Euro/Yen Carry Return Index 154.4 +.3%

• Emerging Markets Currency Volatility(VXY) 9.9 +1.3%

• CBOE S&P 500 Implied Correlation Index 33.5 +2.4% 

• ISE Sentiment Index 117.0 +14.0 points
  

• Total Put/Call .89 unch.

• NYSE Arms 1.31 +22.4%

Credit Investor Angst:

• North American Investment Grade CDS Index 81.2 +.53%
  

• US Energy High-Yield OAS 421.47 +.64%
• Bloomberg TRACE # Distressed Bonds Traded 437.0 +12.0
  

• European Financial Sector CDS Index 101.52 -2.4% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 383.36 -2.8%
  

• Italian/German 10Y Yld Spread 191.0 basis points +2.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 130.41 -.73%
  

• Emerging Market CDS Index 249.06 +1.18%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 26.3 -.42%

• 2-Year Swap Spread 21.25 basis points unch.
  

• TED Spread 15.75 basis points -1.75 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -20.5 +1.5 basis points
  
• MBS  5/10 Treasury Spread 172.0 +7.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 708.0 -3.0 basis points
  
• Avg. Auto ABS OAS 95.0 +1.0 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 47.6 -.08%
• 3-Month T-Bill Yield 5.16% +1.0 basis point
  

• China Iron Ore Spot 101.7 USD/Metric Tonne +2.2%
• Dutch TTF Nat Gas(European benchmark) 32.8 euros/megawatt-hour -6.4%

• Citi US Economic Surprise Index 6.0 -6.8 points

• Citi Eurozone Economic Surprise Index -21.1 unch.
  

• Citi Emerging Markets Economic Surprise Index 31.3 -3.8 points
• S&P 500 Current Quarter EPS Growth Rate YoY(457 of 500 reporting) -3.9% unch.
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 227.95 +.12:  Growth Rate +2.4% +.2 percentage point, P/E 18.1 -.1
  
• S&P 500 Current Year Estimated Profit Margin 12.23% -1.0 basis point
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(8 of 10 reporting) -2.1% unch.
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 198.52 +.89: Growth Rate +28.2% -80.0 basis points, P/E 32.0 -.2
  
• Bloomberg US Financial Conditions Index -.04 +6.0 basis points
• Bloomberg Euro-Zone Financial Conditions Index -4.54 -3.0 basis points
  
• US Yield Curve -5.75 basis points (2s/10s) -5.25 basis points
• US Atlanta Fed 2Q GDPNow Forecast +2.75% unch.
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +4.65% unch.: CPI YoY +4.14% unch.
  
• 10-Year TIPS Spread 2.20 +4.0 basis points
  
• Highest target rate probability for July 26th FOMC meeting: 60.5%(+6.3 percentage points) chance of 5.0%-5.25%. Highest target rate probability for Sept. 20th meeting: 47.4%(-2.5 percentage points) chance of 4.75%-5.0%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +117 open in Japan 
• China A50 Futures: Indicating -72 open in China

• DAX Futures: Indicating +15 open in Germany

Portfolio:

• Slightly Higher:  On gains in my index hedges and emerging market shorts
  

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

• Market Exposure: Moved to 25% Net Long