Stocks Modestly Lower into Final Hour on US Policy-Induced Stagflation Fears, Higher Long-Term Rates, Quarter-End Profit-Taking, Road & Rail/Retail Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Slightly Lower
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 13.2 +.7%
• DJIA Intraday % Swing .71 -6.1%
  
• Bloomberg Global Risk On/Risk Off Index 68.5 +.4%

• Euro/Yen Carry Return Index 178.1 +.3%

• Emerging Markets Currency Volatility(VXY) 6.4 -1.2%

• CBOE S&P 500 Implied Correlation Index 12.1 +1.0% 

• ISE Sentiment Index 154.0 +24.0
  

• Total Put/Call .96 -26.2%

• NYSE Arms .64 -62.8%
  
• NYSE Non-Block Money Flow -$28.3M 
  

Credit Investor Angst:

• North American Investment Grade CDS Index 52.0 -.7%
  

• US Energy High-Yield OAS 281.4 +.2%
• Bloomberg TRACE # Distressed Bonds Traded 289 +1
  

• European Financial Sector CDS Index 64.5 -.7%
  
• Deutsche Bank Subordinated 5Y Credit Default Swap 189.90 -1.2%
  

• Italian/German 10Y Yld Spread 132.0 basis points +5.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 103.0 -.3%
  

• Emerging Market CDS Index 167.9 -.8%
  
• Israel Sovereign CDS 120.2 -.2%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 24.7 +.11%

• 2-Year SOFR Swap Spread -10.25 basis points +.5 basis point
  

• Treasury Repo 3M T-Bill Spread 7.0 basis points +.75 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -2.75 +.75 basis point
  
• MBS  5/10 Treasury Spread 139.0 -3.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 784.0 -3.0 basis points
  
• Avg. Auto ABS OAS 61.0 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 39.7 -.07%
• 3-Month T-Bill Yield 5.38% unch.
  

• China Iron Ore Spot 108.5 USD/Metric Tonne -.06%
• Dutch TTF Nat Gas(European benchmark) 28.5 euros/megawatt-hour +2.6%

• Citi US Economic Surprise Index 32.5 +.7 point

• Citi Eurozone Economic Surprise Index 44.7 +4.2 points

• Citi Emerging Markets Economic Surprise Index 17.7 -.8 point
• S&P 500 Current Quarter EPS Growth Rate YoY(12 of 500 reporting) +40.7% -10.1 percentage points
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 249.78 +.46:  Growth Rate +11.9% +.2 percentage point, P/E 20.9 -.2
  
• S&P 500 Current Year Estimated Profit Margin 12.84% +1.0 basis point
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(0 of 10 reporting) +n/a
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 311.23 +.50: Growth Rate +29.5% +.2 percentage point, P/E 32.4 -.3
  
• Bloomberg US Financial Conditions Index 1.12 -6.0 basis points
  
• Bloomberg Euro-Zone Financial Conditions Index 1.0 -8.0 basis points
  
• US Yield Curve -37.75 basis points (2s/10s) -1.25 basis points
  
• US Atlanta Fed 1Q GDPNow Forecast +2.1% unch.
  
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 55.4% -2.5 percentage points
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +2.78% unch.: CPI YoY +3.37% unch.
  
• 10-Year TIPS Spread 2.34 -2.0 basis points
  
• Highest target rate probability for June 12th FOMC meeting: 63.4%(-3.3 percentage points) chance of 5.0%-5.25%. Highest target rate probability for July 31st meeting: 47.8%(+1.2 percentage points) chance of 5.0%-5.25%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -154 open in Japan 
• China A50 Futures: Indicating +27 open in China

• DAX Futures: Indicating +290 open in Germany

Portfolio:

• Slightly Lower:  On losses in my industrial/transport/tech sector longs
  

• Disclosed Trades: None
  

• Market Exposure: 75% Net Long