Monday, April 21, 2025

Stocks Falling Substantially into Final Hour on China's Trade War Escalation Moves, Increasing Fed Chairman Uncertainty, Rising Long-Term Rates, Tech/Healthcare Provider Sector Weakness

Broad Equity Market Tone:

  • Advance/Decline Line: Substantially Lower
  • Sector Performance: Every Sector Declining
  • Volume: Below Average
  • Market Leading Stocks: Performing In Line
Equity Investor Angst:
  • Volatility(VIX) 35.0 +18.2%
  • S&P 500 Intraday % Swing 2.1 +52.4%
  • Bloomberg Global Risk On/Risk Off Index 53.2 -5.0% 
  • Swiss Franc/Offshore Chinese Renminbi Cross 9.03 +.95%
  • Euro/Yen Carry Return Index 181.77 -.01%
  • Emerging Markets Currency Volatility(VXY) 9.2 -5.3%
  • CBOE S&P 500 Implied Correlation Index 44.4 +10.6% 
  • ISE Sentiment Index 118.0 +5.0
  • Total Put/Call 1.05 +15.4%
  • NYSE Arms .88 +10.0%
  • NYSE Non-Block Money Flow -$648.0M 
Credit Investor Angst:
  • North American Investment Grade CDS Index 74.67 +6.7%
  • US Energy High-Yield OAS 526.26 +5.6%
  • Bloomberg TRACE # Distressed Bonds Traded 296.0 unch.
  • European Financial Sector CDS Index 77.5 +.07%
  • Deutsche Bank Subordinated 5Y Credit Default Swap 184.2 +.3%
  • Italian/German 10Y Yld Spread 118.0 basis points unch.
  • Asia Ex-Japan Investment Grade CDS Index 103.4 -1.5%
  • Emerging Market CDS Index 211.9 +1.8%
  • Israel Sovereign CDS 109.0 -.3%
  • China Corp. High-Yield Bond USD ETF(KHYB) 23.4 -.54%
  • 2-Year SOFR Swap Spread -27.0 basis points -3.0 basis points
  • 3M T-Bill Treasury Repo Spread .25 basis point +.25 basis point
  • 3-Month EUR/USD Cross-Currency Basis Swap -1.25 +1.5 basis points
  • MBS  5/10 Treasury Spread 163.0 +5.0 basis points
  • Bloomberg CMBS Investment Grade Bbb Average OAS 643.0 unch.
  • Avg. Auto ABS OAS 73.0 unch.
Economic Gauges:
  • Bloomberg Emerging Markets Currency Index 37.0 +.2% 
  • US 10-Year T-Note Yield 4.40% +8.0 basis points
  • 3-Month T-Bill Yield 4.31% unch.
  • China Iron Ore Spot 98.9 USD/Metric Tonne -.5%
  • Dutch TTF Nat Gas(European benchmark) 35.7 euros/megawatt-hour unch.
  • Citi US Economic Surprise Index -20.2 +1.6 points
  • Citi Eurozone Economic Surprise Index -3.5 -4.1 points
  • Citi Emerging Markets Economic Surprise Index 14.4 +.6 point
  • S&P 500 Current Quarter EPS Growth Rate YoY(59 of 500 reporting) +6.8% +.4 percentage point
  • S&P 500 Blended Forward 12 Months Mean EPS Estimate 276.21 -.16:  Growth Rate +12.4% -.1 percentage point, P/E 18.6 -.6
  • S&P 500 Current Year Estimated Profit Margin 13.43% -3.0 basis points
  • NYSE FANG+ Current Quarter EPS Growth Rate YoY(1 of 10 reporting) +23.7% unch.
  • NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 417.86 +.38: Growth Rate +20.8% +.1 percentage point, P/E 25.8 -.9
  • Bloomberg US Financial Conditions Index -.47 unch.
  • Bloomberg Euro-Zone Financial Conditions Index .68 unch.
  • Bloomberg Global Trade Policy Uncertainty Index 12.7 -.9
  • US Yield Curve 65.75 basis points (2s/10s) +13.5 basis points
  • US Atlanta Fed GDPNow Q1 Forecast -2.2% unch.
  • US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 43.9% +2.0 percentage points
  • Cleveland Fed Inflation Nowcast Core PCE YoY +2.54% unch.: CPI YoY +2.38% unch.
  • 1-Year TIPS Spread 3.13 -8.0 basis points
  • 10-Year TIPS Spread 2.23 unch.
  • Highest target rate probability for June 18th FOMC meeting: 63.5% (+3.4 percentage points) chance of 4.0%-4.25%. Highest target rate probability for July 30th meeting: 59.7%(+10.2 percentage points) chance of 3.75%-4.0%. (current target rate is 4.25-4.5%)
Overseas Futures:
  • Nikkei 225 Futures: Indicating -120 open in Japan 
  • China A50 Futures: Indicating -87 open in China
  • DAX Futures: Indicating +155 open in Germany
Portfolio:
  • Slightly Lower: On losses in my utility/consumer discretionary/industrial/tech sector longs
  • Disclosed Trades: Added to my (IWM)/(QQQ) hedges
  • Market Exposure: Moved to Market Neutral

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