Monday, May 19, 2025

Stocks Slightly Lower into Final Hour on US Debt Downgrade, Technical Selling, Profit-Taking, Energy/Homebuilding Sector Weakness

Broad Equity Market Tone:

  • Advance/Decline Line: Lower
  • Sector Performance: Mixed
  • Volume: Below Average
  • Market Leading Stocks: Performing In Line
Equity Investor Angst:
  • Volatility(VIX) 18.1 +4.9%
  • S&P 500 Intraday % Swing .93 +86.5%
  • Bloomberg Global Risk On/Risk Off Index 71.0 +3.1% 
  • Swiss Franc/Offshore Chinese Renminbi Cross 8.64 +.41%
  • Euro/Yen Carry Return Index 182.9 +.2%
  • Emerging Markets Currency Volatility(VXY) 8.40 -.9%
  • CBOE S&P 500 Implied Correlation Index 20.4 +3.3% 
  • ISE Sentiment Index 165.0 +14.0
  • Total Put/Call .90 +28.6%
  • NYSE Arms .86 -1.2%
  • NYSE Non-Block Money Flow -$191.6M 
Credit Investor Angst:
  • North American Investment Grade CDS Index 55.2 -1.3%
  • US Energy High-Yield OAS 425.3 +1.1%
  • Bloomberg TRACE # Distressed Bonds Traded 233.0 unch.
  • European Financial Sector CDS Index 61.6 +.01%
  • Deutsche Bank Subordinated 5Y Credit Default Swap 149.7 +1.5%
  • Italian/German 10Y Yld Spread 101.0 basis points unch.
  • Asia Ex-Japan Investment Grade CDS Index 80.5 +1.4%
  • Emerging Market CDS Index 169.1 +.4%
  • Israel Sovereign CDS 98.7 -1.9%
  • China Corp. High-Yield Bond USD ETF(KHYB) 23.95 +.02%
  • 2-Year SOFR Swap Spread -21.25 basis points unch.
  • 3M T-Bill Treasury Repo Spread 5.75 basis point +1.25 basis points
  • 3-Month EUR/USD Cross-Currency Basis Swap -2.0 -.25 basis point
  • MBS  5/10 Treasury Spread 153.0 +4.0 basis points
  • Bloomberg CMBS Investment Grade Bbb Average OAS 617.0 unch.
  • Avg. Auto ABS OAS 64.0 unch.
Economic Gauges:
  • Bloomberg Emerging Markets Currency Index 37.0 +.24% 
  • US 10-Year T-Note Yield 4.47% -1.0 basis point
  • 3-Month T-Bill Yield 4.35% +1.0 basis point
  • China Iron Ore Spot 99.7 USD/Metric Tonne +.2%
  • Dutch TTF Nat Gas(European benchmark) 35.2 euros/megawatt-hour +.2%
  • Citi US Economic Surprise Index -10.6 +2.0 points
  • Citi Eurozone Economic Surprise Index 16.0 +.6 point
  • Citi Emerging Markets Economic Surprise Index 27.9 -.7
  • S&P 500 Current Quarter EPS Growth Rate YoY(462 of 500 reporting) +11.5% -.4 percentage point
  • S&P 500 Blended Forward 12 Months Mean EPS Estimate 276.57 +.17:  Growth Rate +12.1% +.1 percentage point, P/E 21.5 unch.
  • S&P 500 Current Year Estimated Profit Margin 13.32% -2.0 basis points
  • NYSE FANG+ Current Quarter EPS Growth Rate YoY(7 of 10 reporting) +29.1% unch.
  • NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 425.49 +.28: Growth Rate +23.0% unch., P/E 31.9 -.1
  • Bloomberg US Financial Conditions Index .45 +8.0 basis points
  • Bloomberg Euro-Zone Financial Conditions Index 1.27 +6.0 basis points
  • Bloomberg Global Trade Policy Uncertainty Index 7.3 -.4
  • US Yield Curve 48.5 basis points (2s/10s) +2.5 basis points
  • US Atlanta Fed GDPNow Q2 Forecast +2.4% unch.
  • US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 38.8% unch.
  • Cleveland Fed Inflation Nowcast Core PCE YoY +2.60% unch.: CPI YoY +2.38% unch.
  • 1-Year TIPS Spread 2.89 +3.0 basis points
  • 10-Year TIPS Spread 2.37 +1.0 basis point
  • Highest target rate probability for July 30th FOMC meeting: 66.9% (unch.) chance of 4.25%-4.5%. Highest target rate probability for Sept. 17th meeting: 51.2%(+1.4 percentage points) chance of 4.0%-4.25%. (current target rate is 4.25-4.5%)
Overseas Futures:
  • Nikkei 225 Futures: Indicating +62 open in Japan 
  • China A50 Futures: Indicating +16 open in China
  • DAX Futures: Indicating +152 open in Germany
Portfolio:
  • Slightly Higher: On gains in my industrial/utility/financial/industrial sector longs and emerging market shorts
  • Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
  • Market Exposure: Moved to 100% Net Long

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