Wednesday, May 21, 2025

Stocks Dropping Substantially into Final Hour on "Big, Beautiful Bill" Passage Wrangling, Surging Long-Term Rates, Earnings Outlook Jitters, Transport/Financial Sector Weakness

Economic Gauges:
  • Bloomberg Emerging Markets Currency Index 37.1 +.2% 
  • US 10-Year T-Note Yield 4.59% +10.0 basis points
  • 3-Month T-Bill Yield 4.34% +1.0 basis point
  • China Iron Ore Spot 99.7 USD/Metric Tonne -.11%
  • Dutch TTF Nat Gas(European benchmark) 36.6 euros/megawatt-hour -1.0%
  • Citi US Economic Surprise Index -8.0 +1.5 points
  • Citi Eurozone Economic Surprise Index 18.9 +1.5 points
  • Citi Emerging Markets Economic Surprise Index 28.8 +.5
  • S&P 500 Current Quarter EPS Growth Rate YoY(469 of 500 reporting) +11.2% -.2 percentage point
  • S&P 500 Blended Forward 12 Months Mean EPS Estimate 275.81 -.05:  Growth Rate +11.8% unch., P/E 21.5 unch.
  • S&P 500 Current Year Estimated Profit Margin 13.31% unch.
  • NYSE FANG+ Current Quarter EPS Growth Rate YoY(7 of 10 reporting) +29.1% unch.
  • NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 425.80 +.26: Growth Rate +23.1% unch., P/E 32.2 +.3
  • Bloomberg US Financial Conditions Index .40 +2.0 basis points
  • Bloomberg Euro-Zone Financial Conditions Index 1.52 +6.0 basis points
  • Bloomberg Global Trade Policy Uncertainty Index 6.1 -.7
  • US Yield Curve 57.75 basis points (2s/10s) +7.0 basis points
  • US Atlanta Fed GDPNow Q2 Forecast +2.4% unch.
  • US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 37.0% -1.6 percentage points
  • Cleveland Fed Inflation Nowcast Core PCE YoY +2.60% unch.: CPI YoY +2.40% +2.0 basis points
  • 1-Year TIPS Spread 2.97 +5.0 basis points
  • 10-Year TIPS Spread 2.37 +1.0 basis point
  • Highest target rate probability for July 30th FOMC meeting: 71.2% (unch.) chance of 4.25%-4.5%. Highest target rate probability for Sept. 17th meeting: 50.5%(-1.6 percentage points) chance of 4.0%-4.25%. (current target rate is 4.25-4.5%)
Overseas Futures:
  • Nikkei 225 Futures: Indicating -347 open in Japan 
  • China A50 Futures: Indicating -22 open in China
  • DAX Futures: Indicating +47 open in Germany
Portfolio:
  • Slightly Lower: On losses in my industrial/financial/technology/consumer discretionary/utility sector longs 
  • Disclosed Trades: Added to my (IWM)/(QQQ) hedges and to my emerging market shorts
  • Market Exposure: Moved to 25% Net Long

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