Stocks Reversing Higher into Final Hour on Stable Long-Term Rates, Earnings Outlook Optimism, Short-Covering, Tech/Pharma Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 13.0 -2.6%
• DJIA Intraday % Swing 1.0 +6.8%
  
• Bloomberg Global Risk On/Risk Off Index 56.8 -1.2%

• Euro/Yen Carry Return Index 187.5 -.1%

• Emerging Markets Currency Volatility(VXY) 7.6 +.4%

• CBOE S&P 500 Implied Correlation Index 10.8 -6.0% 

• ISE Sentiment Index 149.0 +6.0
  

• Total Put/Call .90 -6.3%

• NYSE Arms 1.24 +47.6%
  
• NYSE Non-Block Money Flow -$232.7M 
  

Credit Investor Angst:

• North American Investment Grade CDS Index 53.8 +1.2%
  

• US Energy High-Yield OAS 275.2 -.3%
• Bloomberg TRACE # Distressed Bonds Traded 259 +1
  

• European Financial Sector CDS Index 70.97 +1.2%
  
• Deutsche Bank Subordinated 5Y Credit Default Swap 183.6 +.17%
  

• Italian/German 10Y Yld Spread 152.0 basis points +1.0 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 101.0 +.9%
  

• Emerging Market CDS Index 171.9 +.1%
  
• Israel Sovereign CDS 133.6 +1.1%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 24.9 +.08%

• 2-Year SOFR Swap Spread -18.0 basis points -.25 basis point
  

• Treasury Repo 3M T-Bill Spread 5.75 basis points +.75 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -4.25 +.75 basis point
  
• MBS  5/10 Treasury Spread 147.0 +3.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 721.0 +4.0 basis points
  
• Avg. Auto ABS OAS 63.0 +2.0 basis points
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 39.0 -.2%
• 3-Month T-Bill Yield 5.36% +1.0 basis point
  

• China Iron Ore Spot 103.5 USD/Metric Tonne +.2%
• Dutch TTF Nat Gas(European benchmark) 34.9 euros/megawatt-hour +2.3%

• Citi US Economic Surprise Index -26.0 +.7 point

• Citi Eurozone Economic Surprise Index -13.4 +.8 point

• Citi Emerging Markets Economic Surprise Index 10.8 +.5 point
• S&P 500 Current Quarter EPS Growth Rate YoY(10 of 500 reporting) +7.0% +5.0 percentage points
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 260.59 +.38:  Growth Rate +14.2% +.2 percentage point, P/E 21.0 -.1
  
• S&P 500 Current Year Estimated Profit Margin 12.86% +3.0 basis points
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(0 of 10 reporting) n/a
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 328.35 -7.80: Growth Rate +22.4% -2.9 percentage points, P/E 33.9 +.9
  
• Bloomberg US Financial Conditions Index .94 -3.0 basis points
  
• Bloomberg Euro-Zone Financial Conditions Index .59 +5.0 basis points
  
• US Yield Curve -50.25 basis points (2s/10s) -1.25 basis points
  
• US Atlanta Fed 2Q GDPNow Forecast +3.0% unch.
  
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 53.7% +.8 percentage point
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +2.56% unch.: CPI YoY +3.12% -1.0 basis point
  
• 10-Year TIPS Spread 2.22 -1.0 basis point
  
• Highest target rate probability for Sept. 18th FOMC meeting: 61.1%(+.6 percentage point) chance of 5.0%-5.25%. Highest target rate probability for Nov. 7th meeting: 50.9%(+.6 percentage point) chance of 5.0%-5.25%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +182 open in Japan 
• China A50 Futures: Indicating +40 open in China

• DAX Futures: Indicating +213 open in Germany

Portfolio:

• Slightly Higher:  On gains in my tech sector longs and emerging market shorts
  

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
  

• Market Exposure: Moved to 100% Net Long