Stocks Lower into Afternoon on US Policy-Induced Stagflation Fears, Diminished US Debt Ceiling Agreement Optimism, Regional Bank Contagion Worries, Consumer Discretionary/Financial Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Modestly Lower
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 16.8 +4.7%
• DJIA Intraday % Swing .95%
  
• Bloomberg Global Risk On/Risk Off Index 58.2 +1.0%

• Euro/Yen Carry Return Index 156.3 -.1%

• Emerging Markets Currency Volatility(VXY) 9.5 -.5%

• CBOE S&P 500 Implied Correlation Index 30.0 +7.4% 

• ISE Sentiment Index 110.0 -4.0 points
  

• Total Put/Call .87 +6.1%

• NYSE Arms 1.17 +21.9%

Credit Investor Angst:

• North American Investment Grade CDS Index 79.5 -.34%
  

• US Energy High-Yield OAS 406.99 -.28%
• Bloomberg TRACE # Distressed Bonds Traded 438.0 -9.0
  

• European Financial Sector CDS Index 96.2 -.8% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 318.02 -6.6%
  

• Italian/German 10Y Yld Spread 184.0 basis points -3.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 126.9 -2.6%
  

• Emerging Market CDS Index 257.42 +.5%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 25.9 unch.

• 2-Year Swap Spread 19.25 basis points +.25 basis point
  

• TED Spread 13.5 basis points +.2 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -18.25 +1.25 basis points
  
• MBS  5/10 Treasury Spread 173.0 +3.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 716.0 +2.0 basis points
  
• Avg. Auto ABS OAS 94.0 +1.0 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 47.2 unch.
• 3-Month T-Bill Yield 5.24% unch.
  

• China Iron Ore Spot 105.0 USD/Metric Tonne -.4%
• Dutch TTF Nat Gas(European benchmark) 30.2 euros/megawatt-hour +.3%

• Citi US Economic Surprise Index 5.5 -.6 point

• Citi Eurozone Economic Surprise Index -27.5 -.1 point
  

• Citi Emerging Markets Economic Surprise Index 17.3 -.7 point
• S&P 500 Current Quarter EPS Growth Rate YoY(471 of 500 reporting) -2.8% +.4 percentage point
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 228.24 -.07:  Growth Rate +2.3% unch., P/E 18.4 +.1
  
• S&P 500 Current Year Estimated Profit Margin 12.22% -3.0 basis points
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(8 of 10 reporting) -2.1% unch.
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 199.74 +.13: Growth Rate +29.0% +.2 percentage point, P/E 34.1 +.2
  
• Bloomberg US Financial Conditions Index .06 -8.0 basis points
• Bloomberg Euro-Zone Financial Conditions Index -4.54 -6.0 basis points
  
• US Yield Curve -59.0 basis points (2s/10s) +2.5 basis points
• US Atlanta Fed 2Q GDPNow Forecast +2.89% unch.
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +4.65% unch.: CPI YoY +4.13% unch.
  
• 10-Year TIPS Spread 2.25 +1.0 basis point
  
• Highest target rate probability for July 26th FOMC meeting: 86.2%(+24.0 percentage points) chance of 5.0%-5.25%. Highest target rate probability for Sept. 20th meeting: 57.2%(+5.5 percentage points) chance of 5.0%-5.25%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -30 open in Japan 
• China A50 Futures: Indicating -10 open in China

• DAX Futures: Indicating +38 open in Germany

Portfolio:

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

• Disclosed Trades:  None
  

• Market Exposure: 50% Net Long