Stocks Modestly Lower into Final Hour on Mideast War Escalation Worries, War-Induced Inflation Fears, Rising Long-Term Rates, Consumer Discretionary/Alt Energy Sector Weakness

Economic/Market Gauges:

• North American Investment Grade CDS Index 51.4 +1.2%
• BofA Private Credit Proxy Index 73.0 -1.4% 
• Bloomberg US Securitized MBS/ABS/CMBS Avg. OAS .29 +2.0 basis points
• BofA Global Financial Stress Indicator -.21 -1.0 basis point
• European Financial Sector CDS Index 53.6 +.7%
• Emerging Market CDS Index 139.5 +1.1%
• Israel Sovereign CDS 54.0 +2.2%
• Bloomberg Global Trade Policy Uncertainty Index .6 unch.
• US Morning Consult Daily Consume Sentiment Index 89.5 -.7

• Citi US Economic Surprise Index 17.2 +2.2

• Citi Eurozone Economic Surprise Index 74.5 +4.0

• Citi Emerging Markets Economic Surprise Index 26.6 -5.5
• S&P 500 Current Quarter EPS Growth Rate YoY(455 of 500 reporting) +50.5% -.1 percentage point
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 389.88 +.83:  Growth Rate +32.5% +.3 percentage point, P/E 19.9 -.1
• S&P 500 Current Year Estimated Profit Margin 16.26% +1.0 basis point
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(8 of 10 reporting) +138.4% unch.
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 947.50 +2.25: Growth Rate +82.7% +.4 percentage point, P/E 19.7 -.1
• Bloomberg US Financial Conditions Index 1.36 unch.
• US Yield Curve 54.25 basis points (2s/10s) +2.5 basis points
• Bloomberg Industrial Metal Index 179.82 +.2%
• Dutch TTF Nat Gas(European benchmark) 62.6 euros/megawatt-hour +1.9%
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 14.7% unch.
• US Atlanta Fed GDPNow Q3 Forecast +4.3% -1.5 percentage points
• US 10-Year T-Note Yield 4.7% +3.0 basis points
• 1-Year TIPS Spread 1.71 +4.0 basis points

• Highest target rate probability for Oct. 28th FOMC meeting: 50.8% (-2.8 percentage points) chance of 3.5%-3.75%. Highest target rate probability for Dec. 9th meeting: 45.3%(unch.) chance of 3.75%-4.0%. (current target rate is 3.5-3.75%)
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -145 open in Japan 
• China A50 Futures: Indicating -80 open in China
• KOSPI 200 Futures: Indicating -3 open in South Korea 

• DAX Futures: Indicating +34 open in Germany

Portfolio:

• Higher: On gains in my biotech/tech/industrial/energy sector longs and index hedges
• Disclosed Trades: Added (IWM)/(QQQ) hedges
• Market Exposure: Moved to 75% net long