Stocks Falling into Afternoon on US Policy-Induced Stagflation Fears, Rising Long-Term Rates, Auto Strike/Govt Shutdown Worries, Homebuilding/Tech Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Almost Every Sector Declining
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 16.0 +5.6%
• DJIA Intraday % Swing .56%
  
• Bloomberg Global Risk On/Risk Off Index 72.2 -.2%

• Euro/Yen Carry Return Index 167.12 -.51%

• Emerging Markets Currency Volatility(VXY) 8.38 +.72%

• CBOE S&P 500 Implied Correlation Index 24.1 +3.1% 

• ISE Sentiment Index 83.0 -16.0 points
  

• Total Put/Call .96 -10.3%

• NYSE Arms .95 -22.8%

Credit Investor Angst:

• North American Investment Grade CDS Index 71.21 +1.3%
  

• US Energy High-Yield OAS 315.13 +3.8%
• Bloomberg TRACE # Distressed Bonds Traded 327.0 -2
  

• European Financial Sector CDS Index 88.8 +3.7% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 291.20 +3.9%
  

• Italian/German 10Y Yld Spread 180.0 basis points +5.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 126.1 +3.2%
  

• Emerging Market CDS Index 215.98 +.5%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 24.96 -.4%

• 2-Year SOFR Swap Spread -10.0 basis points -.25 basis point
  

• TED Spread 18.75 basis points +.25 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -9.75 +.25 basis point
  
• MBS  5/10 Treasury Spread 170.0 +4.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 909.0 +1.0 basis point
  
• Avg. Auto ABS OAS 79.0 +1.0 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 42.1 -.33%
• 3-Month T-Bill Yield 5.47% unch.
  

• China Iron Ore Spot 118.1 USD/Metric Tonne -2.7%
• Dutch TTF Nat Gas(European benchmark) 39.1 euros/megawatt-hour +4.9%

• Citi US Economic Surprise Index 55.9 -1.3 points

• Citi Eurozone Economic Surprise Index -50.0 +1.2 points

• Citi Emerging Markets Economic Surprise Index 12.2 +.3 point
• S&P 500 Current Quarter EPS Growth Rate YoY(8 of 500 reporting) +8.4% +2.3 percentage points
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 239.47 +.06:  Growth Rate +8.9% unch., P/E 18.2 -.4
  
• S&P 500 Current Year Estimated Profit Margin 12.13% unch.
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(0 of 10 reporting) n/a
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 262.59 +.14: Growth Rate +58.4% +.1 percentage point, P/E 28.0 -1.1
  
• Bloomberg US Financial Conditions Index .41 -5.0 basis points
  
• Bloomberg Euro-Zone Financial Conditions Index .23 -5.0 basis points
  
• US Yield Curve -67.5 basis points (2s/10s) +10.5 basis points
  
• US Atlanta Fed 2Q GDPNow Forecast +4.86% unch.
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +3.95% unch.: CPI YoY +3.69% unch.
  
• 10-Year TIPS Spread 2.38 +3.0 basis points
  
• Highest target rate probability for Dec. 13th FOMC meeting: 54.8%(-.9 percentage point) chance of 5.25%-5.5%. Highest target rate probability for Jan. 31st meeting: 53.7%(-.9 percentage point) chance of 5.25%-5.5%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -400 open in Japan 
• China A50 Futures: Indicating -27 open in China

• DAX Futures: Indicating +97 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