Stocks Lower into Afternoon on US Policy-Induced Stagflation Fears, Earnings Outlook Worries, Technical Selling, Biotech/Commodity Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Around Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 17.4 +1.5%
• DJIA Intraday % Swing .62%
  
• Bloomberg Global Risk On/Risk Off Index 54.7 +.6%

• Euro/Yen Carry Return Index 155.4 +.21%

• Emerging Markets Currency Volatility(VXY) 9.4 unch.

• CBOE S&P 500 Implied Correlation Index 31.2 +1.5% 

• ISE Sentiment Index 100.0 -3.0 points
  

• Total Put/Call .89 -6.3%

• NYSE Arms 1.09 +43.4%

Credit Investor Angst:

• North American Investment Grade CDS Index 81.8 +1.1%
  

• US Energy High-Yield OAS 418.31 +.17%
• Bloomberg TRACE # Distressed Bonds Traded 433.0 +13.0
  

• European Financial Sector CDS Index 101.1 +.09% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 375.5 -1.9%
  

• Italian/German 10Y Yld Spread 187.0 basis points -1.0 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 130.0 +.17%
  

• Emerging Market CDS Index 262.1 +1.3%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 26.1 -.4%

• 2-Year Swap Spread 20.0 basis points -.75 basis point
  

• TED Spread 17.0 basis points +.25 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -20.0 -.25 basis point
  
• MBS  5/10 Treasury Spread 175.0 +1.0 basis point
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 711.0 unch.
  
• Avg. Auto ABS OAS 92.0 -1.0 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 47.4 -.40%
• 3-Month T-Bill Yield 5.13% -1.0 basis point
  

• China Iron Ore Spot 104.3 USD/Metric Tonne -.7%
• Dutch TTF Nat Gas(European benchmark) 31.8 euros/megawatt-hour -1.5%

• Citi US Economic Surprise Index 2.2 +5.1 points

• Citi Eurozone Economic Surprise Index -27.3 -2.6 points
  

• Citi Emerging Markets Economic Surprise Index 15.4 -15.9 points
• S&P 500 Current Quarter EPS Growth Rate YoY(458 of 500 reporting) -3.3% -.1 percentage point
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 228.11 +.02:  Growth Rate +2.2% unch., P/E 18.1 unch.
  
• 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 198.99 +.14: Growth Rate +28.5% +.1 percentage point, P/E 32.6 +.4
  
• Bloomberg US Financial Conditions Index -.06 -2.0 basis points
• Bloomberg Euro-Zone Financial Conditions Index -4.49 +6.0 basis points
  
• US Yield Curve -52.5 basis points (2s/10s) -2.75 basis points
• US Atlanta Fed 2Q GDPNow Forecast +2.61% -14.0 basis points
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +4.65% unch.: CPI YoY +4.13% -1.0 basis point
  
• 10-Year TIPS Spread 2.21 +1.0 basis point
  
• Highest target rate probability for July 26th FOMC meeting: 64.0%(+4.9 percentage points) chance of 5.0%-5.25%. Highest target rate probability for Sept. 20th meeting: 42.9%(-3.0 percentage points) chance of 4.75%-5.0%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +83 open in Japan 
• China A50 Futures: Indicating -18 open in China

• DAX Futures: Indicating +42 open in Germany

Portfolio:

• Slightly Lower:  On losses in my industrial/medical/utility sector longs
  

• Disclosed Trades:  Added to my (IWM)/(QQQ) hedges and emerging market shorts
  

• Market Exposure: Moved to 25% Net Long