Wednesday, May 27, 2026

Stocks Finish Slightly Higher on Mideast War Resolution Hopes, Earnings Outlook Optimism, Falling Inflation Expectations, Consumer Discretionary/Transport Sector Strength

Economic/Market Gauges:

  • North American Investment Grade CDS Index 51.6 -.3%
  • BofA Private Credit Proxy Index 72.0 +.5% 
  • Bloomberg US Securitized MBS/ABS/CMBS Avg. OAS .24 -1.0 basis point
  • BofA Global Financial Stress Indicator -.27 -5.0 basis points
  • European Financial Sector CDS Index 56.5 -.3%
  • Emerging Market CDS Index 154.8 -.8%
  • Israel Sovereign CDS 56.1 -2.8% 
  • Bloomberg Global Trade Policy Uncertainty Index .7 unch.
  • US Morning Consult Daily Consume Sentiment Index 88.0 +.8
  • Citi US Economic Surprise Index 44.8 +1.1
  • Citi Eurozone Economic Surprise Index -73.4 +.3
  • Citi Emerging Markets Economic Surprise Index 33.1 -.7
  • S&P 500 Current Quarter EPS Growth Rate YoY(473 of 500 reporting) +27.5% unch.
  • S&P 500 Blended Forward 12 Months Mean EPS Estimate 359.25 +.42:  Growth Rate +22.4% +.1 percentage point, P/E 20.9 unch.
  • S&P 500 Current Year Estimated Profit Margin 15.45% +1.0 basis point
  • NYSE FANG+ Current Quarter EPS Growth Rate YoY(9 of 10 reporting) +67.2% unch.
  • NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 880.10 +3.10: Growth Rate +122.3% +.8 percentage point, P/E 20.2 +.1 
  • Bloomberg US Financial Conditions Index 1.05 +3.0 basis points
  • US Yield Curve 44.5 basis points (2s/10s) unch.
  • Bloomberg Industrial Metal Index 184.3 -.8%
  • Dutch TTF Nat Gas(European benchmark) 46.1 euros/megawatt-hour -2.1%
  • US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 14.5% +1.7 percentage points
  • US Atlanta Fed GDPNow Q2 Forecast +4.3% unch.
  • US 10-Year T-Note Yield 4.48% -1.0 basis point
  • 1-Year TIPS Spread 2.63 -4.0 basis points
  • Highest target rate probability for July 29th FOMC meeting: 90.6% (+2.5 percentage points) chance of 3.5%-3.75%. Highest target rate probability for Sept. 16th meeting: 73.4%(+1.9 percentage points) chance of 3.5%-3.75%. (current target rate is 3.5-3.75%)
Overseas Futures:
  • Nikkei 225 Futures: Indicating +230 open in Japan 
  • China A50 Futures: Indicating -24 open in China
  • DAX Futures: Indicating +80 open in Germany
Portfolio:
  • Slightly Higher: On gains in my biotech/consumer discretionary/tech sector longs
  • Disclosed Trades: None
  • Market Exposure: 100% Net Long

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