Wednesday, May 29, 2024

Stocks Lower into Final Hour on Rising Long-Term Rates, China Economy Worries, Dollar Strength, Airline/Regional Bank Sector Weakness

Broad Equity Market Tone:

  • Advance/Decline Line: Substantially Lower
  • Sector Performance: Every Sector Declining
  • Volume: Below Average
  • Market Leading Stocks: Underperforming
Equity Investor Angst:
  • Volatility(VIX) 13.9 +7.9%
  • DJIA Intraday % Swing .78 -114.0%
  • Bloomberg Global Risk On/Risk Off Index 65.9 +1.4%
  • Euro/Yen Carry Return Index 186.2 -.14%
  • Emerging Markets Currency Volatility(VXY) 6.9 +2.5%
  • CBOE S&P 500 Implied Correlation Index 12.9 +6.8% 
  • ISE Sentiment Index 114.0 -24.0
  • Total Put/Call .97 +10.2%
  • NYSE Arms .82 +6.5%
  • NYSE Non-Block Money Flow -$475.4M 
Credit Investor Angst:
  • North American Investment Grade CDS Index 50.6 +1.3%
  • US Energy High-Yield OAS 257.3 +1.3%
  • Bloomberg TRACE # Distressed Bonds Traded 263 -25
  • European Financial Sector CDS Index 59.2 +1.8%
  • Deutsche Bank Subordinated 5Y Credit Default Swap 165.4 +.85%
  • Italian/German 10Y Yld Spread 133.0 basis points +2.0 basis points
  • Asia Ex-Japan Investment Grade CDS Index 93.6 +1.7%
  • Emerging Market CDS Index 164.6 +.19%
  • Israel Sovereign CDS 126.2 +1.1%
  • China Corp. High-Yield Bond USD ETF(KHYB) 24.8 -.22%
  • 2-Year SOFR Swap Spread -9.5 basis points +1.5 basis points
  • Treasury Repo 3M T-Bill Spread 9.75 basis points +.5 basis point
  • 3-Month EUR/USD Cross-Currency Basis Swap -3.25 -.75 basis point
  • MBS  5/10 Treasury Spread 145.0 +1.0 basis point
  • Bloomberg CMBS Investment Grade Bbb Average OAS 733.0 +6.0 basis points
  • Avg. Auto ABS OAS 57.0 +1.0 basis point
Economic Gauges:
  • Bloomberg Emerging Markets Currency Index 39.7 -.47%
  • 3-Month T-Bill Yield 5.41% +1.0 basis point
  • China Iron Ore Spot 118.7 USD/Metric Tonne -.22%
  • Dutch TTF Nat Gas(European benchmark) 33.9 euros/megawatt-hour +1.0%
  • Citi US Economic Surprise Index -3.7 +1.5 points
  • Citi Eurozone Economic Surprise Index 20.3 -1.4 points
  • Citi Emerging Markets Economic Surprise Index 13.3 -.5 point
  • S&P 500 Current Quarter EPS Growth Rate YoY(481 of 500 reporting) +7.8% unch.
  • S&P 500 Blended Forward 12 Months Mean EPS Estimate 257.34 +.10:  Growth Rate +12.9% +.1 percentage point, P/E 20.5 -.1
  • S&P 500 Current Year Estimated Profit Margin 12.88% -1.0 basis point
  • NYSE FANG+ Current Quarter EPS Growth Rate YoY(9 of 10 reporting) +52.9% unch.
  • NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 328.83 +.25: Growth Rate +22.6% +.1 percentage point, P/E 32.3 unch.
  • Bloomberg US Financial Conditions Index 1.0 -40.0 basis points
  • Bloomberg Euro-Zone Financial Conditions Index 1.02 +11.0 basis points
  • US Yield Curve -36.25 basis points (2s/10s) +7.25 basis points
  • US Atlanta Fed 2Q GDPNow Forecast +3.5% unch.
  • US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 45.0% -2.1 percentage points
  • Cleveland Fed Inflation Nowcast Core PCE YoY +2.74% unch.: CPI YoY +3.36% -1.0 basis point
  • 10-Year TIPS Spread 2.37 +3.0 basis points
  • Highest target rate probability for July 31st FOMC meeting: 88.9%(unch.) chance of 5.25%-5.5%. Highest target rate probability for Sept. 18th meeting: 53.7%(unch.) chance of 5.25%-5.5%.
Overseas Futures:
  • Nikkei 225 Futures: Indicating -175 open in Japan 
  • China A50 Futures: Indicating -16 open in China
  • DAX Futures: Indicating +91 open in Germany
Portfolio:
  • Lower:  On losses in my financial/industrial/biotech/tech/consumer discretionary sector longs
  • Disclosed Trades: Added to my (IWM)/(QQQ) hedges and my emerging market shorts
  • Market Exposure: Moved to 50% Net Long

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