Stocks Falling into Afternoon on US Policy-Induced Stagflation Fears, Diminished US Debt Ceiling Deal Optimism, European/US High-Yield Debt Angst, Tech/Alt Energy Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Almost Every Sector Declining
  

• Volume: Around Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 20.4 +9.9%
• DJIA Intraday % Swing .85%
  
• Bloomberg Global Risk On/Risk Off Index 55.9 -2.6%

• Euro/Yen Carry Return Index 157.1 +.41%

• Emerging Markets Currency Volatility(VXY) 9.5 -.6%

• CBOE S&P 500 Implied Correlation Index 32.8 +5.3% 

• ISE Sentiment Index 137.0 +40.0 points
  

• Total Put/Call .97 -1.0%

• NYSE Arms 1.03 +25.6%

Credit Investor Angst:

• North American Investment Grade CDS Index 79.3 +1.6%
  

• US Energy High-Yield OAS 404.5 +1.6%
• Bloomberg TRACE # Distressed Bonds Traded 424.0 -3.0
  

• European Financial Sector CDS Index 97.3 +3.9% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 325.69 +4.3%
  

• Italian/German 10Y Yld Spread 187.0 basis points +2.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 125.6 +1.0%
  

• Emerging Market CDS Index 257.3 +.49%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 25.8 unch.

• 2-Year Swap Spread 22.0 basis points +3.75 basis pionts
  

• TED Spread 6.0 basis points -5.0 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -20.75 -2.0 basis points
  
• MBS  5/10 Treasury Spread 181.0 +4.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 718.0 unch.
  
• Avg. Auto ABS OAS 94.0 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 47.1 -.07%
• 3-Month T-Bill Yield 5.33% +6.0 basis points
  

• China Iron Ore Spot 96.0 USD/Metric Tonne +.6%
• Dutch TTF Nat Gas(European benchmark) 27.8 euros/megawatt-hour  -4.6%

• Citi US Economic Surprise Index .5 -1.1 points

• Citi Eurozone Economic Surprise Index -40.4 -4.5 points

• Citi Emerging Markets Economic Surprise Index 13.6 -.3 point
• S&P 500 Current Quarter EPS Growth Rate YoY(477 of 500 reporting) -3.3% +.1 percentage point
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 228.63 +.06:  Growth Rate +2.3% -.1 percentage point, P/E 18.0 -.3
  
• S&P 500 Current Year Estimated Profit Margin 12.24% unch.
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(8 of 10 reporting) -2.1% unch.
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 199.96 +.14: Growth Rate +29.1% +.1 percentage point, P/E 33.4 -.7
  
• Bloomberg US Financial Conditions Index -.06 +3.0 basis points
• Bloomberg Euro-Zone Financial Conditions Index -4.70 -11.0 basis points
  
• US Yield Curve -61.75 basis points (2s/10s) +2.25 basis points
• US Atlanta Fed 2Q GDPNow Forecast +2.89% unch.
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +4.65% unch.: CPI YoY +4.12% unch.
  
• 10-Year TIPS Spread 2.26 unch.
  
• Highest target rate probability for July 26th FOMC meeting: 50.4%(-7.3 percentage points) chance of 5.0%-5.25%. Highest target rate probability for Sept. 20th meeting: 47.5%(-2.6 percentage points) chance of 5.0%-5.25%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -173 open in Japan 
• China A50 Futures: Indicating -84 open in China

• DAX Futures: Indicating +9 open in Germany

Portfolio:

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

• Disclosed Trades:  None
  

• Market Exposure: 25% Net Long