Stocks Lower into Final Hour on US Policy-Induced Stagflation Fears, Higher Long-Term Rates, Technical Selling, Healthcare/Consumer Discretionary Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Almost Every Sector Declining
  

• Volume: Around Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 14.7 +7.8%
• DJIA Intraday % Swing .51 -37.3%
  
• Bloomberg Global Risk On/Risk Off Index 66.8 +1.2%

• Euro/Yen Carry Return Index 177.2 +.15%

• Emerging Markets Currency Volatility(VXY) 6.6 +.2%

• CBOE S&P 500 Implied Correlation Index 15.4 +10.1% 

• ISE Sentiment Index 140.0 +3.0
  

• Total Put/Call .94 unch.

• NYSE Arms .53 -44.8%
  
• NYSE Non-Block Money Flow -$210.9M 
  

Credit Investor Angst:

• North American Investment Grade CDS Index 52.9 +1.5%
  

• US Energy High-Yield OAS 284.4 +1.6%
• Bloomberg TRACE # Distressed Bonds Traded 260 -24
  

• European Financial Sector CDS Index 64.2 +1.1%
  
• Deutsche Bank Subordinated 5Y Credit Default Swap 186.4 +.02%
  

• Italian/German 10Y Yld Spread 144.0 basis points +6.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 102.7 +.4%
  

• Emerging Market CDS Index 171.9 +1.6%
  
• Israel Sovereign CDS 117.5 -.11%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 24.6 -.08%

• 2-Year SOFR Swap Spread -9.0 basis points -.25 basis point
  

• Treasury Repo 3M T-Bill Spread 2.5 basis points -2.5 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -3.75 +.5 basis point
  
• MBS  5/10 Treasury Spread 139.0 -3.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 784.0 -4.0 basis points
  
• Avg. Auto ABS OAS 60.0 -1.0 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 39.7 +.4%
• 3-Month T-Bill Yield 5.36% -1.0 basis point
  

• China Iron Ore Spot 102.7 USD/Metric Tonne +1.1%
• Dutch TTF Nat Gas(European benchmark) 26.2 euros/megawatt-hour-4.2%

• Citi US Economic Surprise Index 41.0 +2.0 points

• Citi Eurozone Economic Surprise Index 40.3 +3.3 points

• Citi Emerging Markets Economic Surprise Index 22.8 unch.
• S&P 500 Current Quarter EPS Growth Rate YoY(17 of 500 reporting) +42.1% -1.5 percentage points
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 250.65 +.15:  Growth Rate +12.3% unch., P/E 20.7 -.2
  
• S&P 500 Current Year Estimated Profit Margin 12.86% unch.
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(0 of 10 reporting) +n/a
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 312.41 +.29: Growth Rate +30.0% +.1 percentage point, P/E 31.7 -.4
  
• Bloomberg US Financial Conditions Index 1.12 +4.0 basis points
  
• Bloomberg Euro-Zone Financial Conditions Index 1.71 +71.0 basis points
  
• US Yield Curve -34.0 basis points (2s/10s) +4.75.0 basis points
  
• US Atlanta Fed 1Q GDPNow Forecast +2.8% unch.
  
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 51.4% -4.5 percentage points
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +2.67% unch.: CPI YoY +3.41% unch.
  
• 10-Year TIPS Spread 2.37 +2.0 basis points
  
• Highest target rate probability for June 12th FOMC meeting: 61.6%(+4.8 percentage points) chance of 5.0%-5.25%. Highest target rate probability for July 31st meeting: 52.8%(+.8 percentage point) chance of 5.0%-5.25%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -154 open in Japan 
• China A50 Futures: Indicating +11 open in China

• DAX Futures: Indicating +270 open in Germany

Portfolio:

• Slightly Lower:  On losses in my consumer discretionary/financial/tech sector longs
  

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

• Market Exposure: 50% Net Long