Stocks Lower into Final Hour on US Policy-Induced Stagflation Fears, Regional Bank Contagion Worries, Earnings Outlook Concerns, Commodity/Financial Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Almost Every Sector Declining
  

• Volume: Above Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 18.0 +11.9%
• DJIA Intraday % Swing 1.73%
  
• Bloomberg Global Risk On/Risk Off Index 52.4 -7.0%

• Euro/Yen Carry Return Index 157.1 -.48%

• Emerging Markets Currency Volatility(VXY) 10.0 +.1%

• CBOE S&P 500 Implied Correlation Index 35.0 +11.3% 

• ISE Sentiment Index 86.0 +8.0 points
  

• Total Put/Call .97 +1.0%

• NYSE Arms 1.45 +51.0%

Credit Investor Angst:

• North American Investment Grade CDS Index 79.6 +3.0%
  

• US Energy High-Yield OAS 400.6 +6.1%
• Bloomberg TRACE # Distressed Bonds Traded 391.0 -8.0
  

• European Financial Sector CDS Index 102.8 +4.4% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 368.74 +2.5%
  

• Italian/German 10Y Yld Spread 192.0 basis points +6.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 129.8 +1.9%
  

• Emerging Market CDS Index 243.3 +3.1%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 26.6 -.19%

• 2-Year Swap Spread 31.5 basis points +2.5 basis points
  

• TED Spread 19.0 basis points -8.25 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -23.5 +4.75 basis points
  
• MBS  5/10 Treasury Spread 168.0 -1.0 basis point
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 699.0 +1.0 basis point
  
• Avg. Auto ABS OAS 94.0 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 47.5 -.13%
• 3-Month T-Bill Yield 5.14% +13.0 basis points
  

• China Iron Ore Spot 101.4 USD/Metric Tonne -.75%
• Dutch TTF Nat Gas(European benchmark) 37.5 euros/megawatt-hour -3.4%

• Citi US Economic Surprise Index 12.5 -6.5 points

• Citi Eurozone Economic Surprise Index 12.5 +2.3 points
  

• Citi Emerging Markets Economic Surprise Index 34.7 +2.4 points
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 227.38 -.18:  Growth Rate +2.2% unch., P/E 18.0 -.4
  
• S&P 500 Current Year Estimated Profit Margin 12.26% -1.0 basis point
  
• Bloomberg US Financial Conditions Index -.05 -12.0 basis points
• Bloomberg Euro-Zone Financial Conditions Index -4.60 -10.0 basis points
  
• US Yield Curve -54.25 basis points (2s/10s) +2.5 basis points
• US Atlanta Fed 2Q GDPNow Forecast +1.84% unch.
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +4.66% unch.: CPI YoY +5.19% unch.
  
• 10-Year TIPS Spread 2.20 -3.0 basis points
  
• Highest target rate probability for June 14th FOMC meeting: 81.0%(+14.5 percentage points) chance of 5.0%-5.25%. Highest target rate probability for July 26th meeting: 53.3%(-8.3 percentage points) chance of 5.0%-5.25%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -330 open in Japan 
• China A50 Futures: Indicating -107 open in China

• DAX Futures: Indicating +143 open in Germany

Portfolio:

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

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

• Market Exposure: Moved to Market Neutral