Stocks Slightly Lower into Final Hour on US Policy-Induced Stagflation Fears, Escalating US/China Trade Tensions, Less Dovish FOMC Commentary, Metals & Mining/Gambling Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Below Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 14.1 +3.1%
• DJIA Intraday % Swing .43%
  
• Bloomberg Global Risk On/Risk Off Index 64.5 +1.2%

• Euro/Yen Carry Return Index 165.4 -.07%

• Emerging Markets Currency Volatility(VXY) 8.7 +.12%

• CBOE S&P 500 Implied Correlation Index 19.7 +3.2% 

• ISE Sentiment Index 131.0 -5.0 points
  

• Total Put/Call .83 -32.5%

• NYSE Arms .76 unch.

Credit Investor Angst:

• North American Investment Grade CDS Index 68.4 +2.7%
  

• US Energy High-Yield OAS 351.9 +.39%
• Bloomberg TRACE # Distressed Bonds Traded 384.0 -1.0
  

• European Financial Sector CDS Index 85.5 +1.6% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 276.85 +.9%
  

• Italian/German 10Y Yld Spread 169.0 basis points -1.0 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 114.2 +.6%
  

• Emerging Market CDS Index 219.27 +2.1%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 25.9 -.56%

• 2-Year Swap Spread 20.75 basis points unch.
  

• TED Spread 18.5 basis points -8.25 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -12.75 +.25 basis point
  
• MBS  5/10 Treasury Spread 173.0 +10.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 713.0 unch.
  
• Avg. Auto ABS OAS 77.0 -1.0 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 43.4 -.34%
• 3-Month T-Bill Yield 5.35% +7.0 basis points
  

• China Iron Ore Spot 109.8 USD/Metric Tonne +.1%
• Dutch TTF Nat Gas(European benchmark) 34.4 euros/megawatt-hour  -2.9%

• Citi US Economic Surprise Index 52.9 -4.1 points

• Citi Eurozone Economic Surprise Index -146.0 +.5 point

• Citi Emerging Markets Economic Surprise Index -3.2 -1.2 points
• S&P 500 Current Quarter EPS Growth Rate YoY(16 of 500 reporting) -20.6% unch.
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 231.44 +.13:  Growth Rate +3.6% +.1 percentage point, P/E 19.2 unch.
  
• S&P 500 Current Year Estimated Profit Margin 12.21% unch.
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(0 of 10 reporting) n/a
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 214.55 +.62: Growth Rate +42.2% +.5 percentage point, P/E 36.4 +.1
  
• Bloomberg US Financial Conditions Index .36 -1.0 basis point
• Bloomberg Euro-Zone Financial Conditions Index -4.17 -6.0 basis points
  
• US Yield Curve -101.25 basis points (2s/10s) +7.5 basis points
  
• US Atlanta Fed 2Q GDPNow Forecast +1.94% unch.
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +4.35% unch.: CPI YoY +3.22% unch.
  
• 10-Year TIPS Spread 2.26 unch.
  
• Highest target rate probability for Sept. 20th FOMC meeting: 71.6%(+2.5 percentage points) chance of 5.25%-5.5%. Highest target rate probability for  Nov. 1st meeting: 56.5%(+1.6 percentage points) chance of 5.25%-5.5%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -188 open in Japan 
• China A50 Futures: Indicating -158 open in China

• DAX Futures: Indicating +84 open in Germany

Portfolio:

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

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

• Market Exposure: Moved to 50% Net Long