Thursday, May 22, 2025

Stocks Reversing Higher into Afternoon on Lower Long-Term Rates, Earnings Outlook Optimism, Short-Covering, Retail/Tech Sector Strength

Economic Gauges:
  • Bloomberg Emerging Markets Currency Index 37.0 -.11% 
  • US 10-Year T-Note Yield 4.55% -5.0 basis points
  • 3-Month T-Bill Yield 4.34% unch.
  • China Iron Ore Spot 99.2 USD/Metric Tonne +.2%
  • Dutch TTF Nat Gas(European benchmark) 36.4 euros/megawatt-hour -.7%
  • Citi US Economic Surprise Index 4.2 +12.2 points
  • Citi Eurozone Economic Surprise Index 8.3 -10.6 points
  • Citi Emerging Markets Economic Surprise Index 28.8 unch.
  • S&P 500 Current Quarter EPS Growth Rate YoY(472 of 500 reporting) +11.3% +.1 percentage point
  • S&P 500 Blended Forward 12 Months Mean EPS Estimate 275.86 +.05:  Growth Rate +11.8% unch., P/E 21.2 -.3
  • S&P 500 Current Year Estimated Profit Margin 13.30% -1.0 basis point
  • NYSE FANG+ Current Quarter EPS Growth Rate YoY(7 of 10 reporting) +29.1% unch.
  • NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 425.86 +.06: Growth Rate +23.1% unch., P/E 32.0 -.2
  • Bloomberg US Financial Conditions Index .29 -13.0 basis points
  • Bloomberg Euro-Zone Financial Conditions Index 2.10 +58.0 basis points
  • Bloomberg Global Trade Policy Uncertainty Index 6.0 -.1
  • US Yield Curve 54.75 basis points (2s/10s) -3.0 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% unch.
  • Cleveland Fed Inflation Nowcast Core PCE YoY +2.60% unch.: CPI YoY +2.40% unch.
  • 1-Year TIPS Spread 2.95 -2.0 basis points
  • 10-Year TIPS Spread 2.36 -1.0 basis point
  • Highest target rate probability for July 30th FOMC meeting: 73.1% (unch.) chance of 4.25%-4.5%. Highest target rate probability for Sept. 17th meeting: 49.6%(-2.0 percentage points) chance of 4.0%-4.25%. (current target rate is 4.25-4.5%)
Overseas Futures:
  • Nikkei 225 Futures: Indicating +215 open in Japan 
  • China A50 Futures: Indicating -12 open in China
  • DAX Futures: Indicating +120 open in Germany
Portfolio:
  • Slightly Higher: On gains in my industrial/financial/technology/consumer discretionary sector longs 
  • Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
  • Market Exposure: Moved to 75% Net Long

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