Stocks Slightly Lower into Final Hour on Higher Long-Term Rates, Growing Tariff Uncertainties, Earnings Outlook Jitters, Road & Rail/Consumer Discretionary Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Modestly Lower
  

• Sector Performance: Mixed

• Volume: Heavy

• Market Leading Stocks: Outperforming

Equity Investor Angst:

• Volatility(VIX) 28.4 +1.8%
• S&P 500 Intraday % Swing 1.4 +9.4%.
  
• Bloomberg Global Risk On/Risk Off Index 71.0 +.9%

• Euro/Yen Carry Return Index 180.4 +1.0%

• Emerging Markets Currency Volatility(VXY) 8.21 unch.

• CBOE S&P 500 Implied Correlation Index 25.5 +17.6% 

• ISE Sentiment Index 124.0 +6.0 points
  

• Total Put/Call .93 +1.1%

• NYSE Arms .74 -17.7%
• NYSE Non-Block Money Flow -$170.2M 
  

Credit Investor Angst:

• North American Investment Grade CDS Index 57.1 +2.8%
  

• US Energy High-Yield OAS 368.6 +1.7%
• Bloomberg TRACE # Distressed Bonds Traded 227.0 +27.0

• European Financial Sector CDS Index 60.9 +1.9%
  
• Deutsche Bank Subordinated 5Y Credit Default Swap 136.3 +1.5%
  

• Italian/German 10Y Yld Spread 112.0 basis points -1.0 basis point

• Asia Ex-Japan Investment Grade CDS Index 72.3 +2.2%
  

• Emerging Market CDS Index 162.8 +.5%
• Israel Sovereign CDS 81.5 +.4%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 24.24 -.02%

• 2-Year SOFR Swap Spread -17.0 basis points unch.

• 3M T-Bill Treasury Repo Spread -3.75 basis point -.75 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap 0.0 unch.
• MBS  5/10 Treasury Spread 138.0 +2.0 basis points
• Bloomberg CMBS Investment Grade Bbb Average OAS 588.0 +2.0 basis points
• Avg. Auto ABS OAS 49.0 +2.0 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 37.44 +.37%
• 3-Month T-Bill Yield 4.28% -1.0 basis point

• China Iron Ore Spot 101.8 USD/Metric Tonne +1.0%
• Dutch TTF Nat Gas(European benchmark) 42.7 euros/megawatt-hour +3.6%

• Citi US Economic Surprise Index -4.2 +2.7 points

• Citi Eurozone Economic Surprise Index 25.4 -.5 point

• Citi Emerging Markets Economic Surprise Index 1.6 -2.3 points
• S&P 500 Current Quarter EPS Growth Rate YoY(495 of 500 reporting) +13.5% unch.
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 277.10 +.04:  Growth Rate +12.5% unch., P/E 20.1 -.3
• S&P 500 Current Year Estimated Profit Margin 13.64% -1.0 basis point
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(10 of 10 reporting) +32.1% unch.
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 410.56 +.35: Growth Rate +18.7% +.1 percentage point, P/E 28.6 +.5
• Bloomberg US Financial Conditions Index -.01 -28.0 basis points
• Bloomberg Euro-Zone Financial Conditions Index 1.07 -10.0 basis points
• US Yield Curve 34.5 basis points (2s/10s) +3.0 basis points
• US Atlanta Fed GDPNow Q1 Forecast -2.41% unch.
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 38.3% +2.9 percentage points

• Cleveland Fed Inflation Nowcast Core PCE YoY +2.62% unch.: CPI YoY +2.83% unch.
• 10-Year TIPS Spread 2.32 +1.0 basis point
• Highest target rate probability for May 7th FOMC meeting: 59.8% (+9.6 percentage points) chance of 4.25%-4.5%. Highest target rate probability for June 18th meeting: 55.4%(+5.7 percentage points) chance of 4.0%-4.25%. (current target rate is 4.25-4.5%)
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -153 open in Japan 
• China A50 Futures: Indicating -20 open in China

• DAX Futures: Indicating +224 open in Germany

Portfolio:

• Higher: On gains in my industrial/financial/tech sector longs
• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges and some emerging market shorts
• Market Exposure: Moved to 75% Net Long