Thursday, February 26, 2026

Stocks Lower into Final Hour on US/Iran War Uncertainty, Sector Rotation, Technical Selling, Tech/Alt Energy Sector Weakness

Economic/Market Gauges:

  • North American Investment Grade CDS Index 53.3 +2.4%
  • BofA Private Credit Proxy Index 75.68 -1.3% 
  • Bloomberg US Securitized MBS/ABS/CMBS Avg. OAS .23 unch.
  • BofA Global Financial Stress Indicator -.08 -5.0 basis points
  • European Financial Sector CDS Index 55.9 +1.7%
  • Emerging Market CDS Index 129.4 +1.1%
  • Bloomberg Global Trade Policy Uncertainty Index 4.2 +.3
  • Citi US Economic Surprise Index 30.2 +1.2
  • Citi Eurozone Economic Surprise Index 20.1 -11.3 points
  • Citi Emerging Markets Economic Surprise Index 34.0 +.8 point
  • S&P 500 Current Quarter EPS Growth Rate YoY(470 of 500 reporting) +14.6% +2.8 percentage points
  • S&P 500 Blended Forward 12 Months Mean EPS Estimate 320.65 -.01:  Growth Rate +15.4% -3.7 percentage points, P/E 21.5 -.1
  • S&P 500 Current Year Estimated Profit Margin 12.51% -2.0 basis points
  • NYSE FANG+ Current Quarter EPS Growth Rate YoY(8 of 10 reporting) +28.0% +8.9 percentage points
  • NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 509.19 +.19: Growth Rate +23.9% unch., P/E 28.2 -.3 point
  • Bloomberg US Financial Conditions Index .68 +10.0 basis points
  • US Yield Curve 57.0 basis points (2s/10s) -.5 basis point 
  • Bloomberg Industrial Metal Index 171.54 -.7% 
  • US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 30.9% +.2 percentage point
  • US Atlanta Fed GDPNow Q1 Forecast +3.1% unch.
  • US 10-Year T-Note Yield 4.01% -4.0 basis points
  • 1-Year TIPS Spread 3.73 +8.0 basis points
  • Highest target rate probability for April 29th FOMC meeting: 82.1% (-2.3 percentage points) chance of 3.5%-3.75%. Highest target rate probability for June 17th meeting: 52.8%(-1.5 percentage points) chance of 3.25%-3.5%. (current target rate is 3.5-3.75%)
Overseas Futures:
  • Nikkei 225 Futures: Indicating -43 open in Japan 
  • China A50 Futures: Indicating -114 open in China
  • DAX Futures: Indicating +80 open in Germany
Portfolio:
  • Higher: On gains in my transport/industrial/consumer discretionary sector longs, index hedges and emerging market shorts
  • Disclosed Trades: Added to my (IWM)/(QQQ) hedges, then covered some
  • Market Exposure: 75% Net Long

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