Stocks Lower into Final Hour on Less Dovish Fed Rhetoric, Higher Long-Term Rates, Technical Selling, Homebuilding/Commodity Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Most Sectors Declining

• Volume: Above Average

• Market Leading Stocks: Underperforming

Equity Investor Angst:

• Volatility(VIX) 16.8 +3.2%
• S&P 500 Intraday % Swing .61 +10.8%
• Bloomberg Global Risk On/Risk Off Index 87.4 +2.2% 
• Swiss Franc/Offshore Chinese Renminbi Cross 8.85 -.8%

• Euro/Yen Carry Return Index 200.08 -.4%

• Emerging Markets Currency Volatility(VXY) 6.39 +.2%

• CBOE S&P 500 Implied Correlation Index 13.8 +1.6% 

• ISE Sentiment Index 165.0 -33.0

• Total Put/Call .78 +4.0%

• NYSE Arms .67 -51.1%
• NYSE Non-Block Money Flow -$176.6M 
  

Credit Investor Angst:

• North American Investment Grade CDS Index 52.63 +1.4%
  

• US Energy High-Yield OAS 344.9 +2.4%
• Bloomberg TRACE # Distressed Bonds Traded 201.0 -9.0

• European Financial Sector CDS Index 60.82 +.7%
  
• Deutsche Bank Subordinated 5Y Credit Default Swap 132.6 +.34%
  

• Italian/German 10Y Yld Spread 81.0 +1.0 basis point

• Asia Ex-Japan Investment Grade CDS Index 65.2 +1.0%
  

• Emerging Market CDS Index 147.8 +.9%
• Israel Sovereign CDS 70.9 -9.6%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 24.5 -.2%

• 2-Year SOFR Swap Spread -22.5 basis points -.75 basis point

• 3M T-Bill Treasury Repo Spread -14.0 basis points +1.75 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -2.0 -.5 basis point
• MBS  5/10 Treasury Spread 125.0 +1.0 basis point
• Bloomberg CMBS Investment Grade Bbb Average OAS 604.0 -1.0 basis point
• Avg. Auto ABS OAS 55.0 +2.0 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 36.3 -.2%
• US 10-Year T-Note Yield 4.14% +3.0 basis points
• 3-Month T-Bill Yield 3.95% +4.0 basis points

• China Iron Ore Spot 105.4 USD/Metric Tonne +.5%
• Dutch TTF Nat Gas(European benchmark) 32.4 euros/megawatt-hour -1.0%

• Citi US Economic Surprise Index 12.6 -.6 point

• Citi Eurozone Economic Surprise Index -3.0 -.4 point

• Citi Emerging Markets Economic Surprise Index 5.3 -.8 point
• S&P 500 Current Quarter EPS Growth Rate YoY(23 of 500 reporting) +9.7% -1.4 percentage points
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 294.75 +.17:  Growth Rate +12.7% +.1 percentage point, P/E 22.9 unch.
• S&P 500 Current Year Estimated Profit Margin 13.48% -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 478.21 +.26: Growth Rate +17.7% +.1 percentage point, P/E 34.3 +.1
• Bloomberg US Financial Conditions Index .69 +5.0 basis points
• Bloomberg Euro-Zone Financial Conditions Index 1.32 +6.0 basis points
• Bloomberg Global Trade Policy Uncertainty Index 1.9 -.2
• US Yield Curve 54.75 basis points (2s/10s) +.75 basis point
• US Atlanta Fed GDPNow Q2 Forecast +3.8% unch.
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 36.5% -1.2 percentage points

• Cleveland Fed Inflation Nowcast Core PCE YoY +2.87% unch.: CPI YoY +2.99% unch.
• 1-Year TIPS Spread 2.70 -5.0 basis points
• 10-Year TIPS Spread 2.36 unch.
• Highest target rate probability for Dec. 10th FOMC meeting: 81.5% (+2.3 percentage points) chance of 3.5%-3.75%. Highest target rate probability for Jan. 28th meeting: 56.1%(+.6 percentage point) chance of 3.5%-3.75%. (current target rate is 4.0-4.25%)
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +450 open in Japan 
• China A50 Futures: Indicating -13 open in China

• DAX Futures: Indicating +140 open in Germany

Portfolio:

• Slightly Higher: On gains in my tech//utility sector longs, index hedges and emerging market shorts
• Disclosed Trades: None
• Market Exposure: 100% Net Long