Tuesday, May 12, 2026

Stocks Lower into Final Hour on Mideast War Resumption Fears, Rising Inflation Expectations, Profit-Taking, Tech/Alt Energy Sector Weakness

Economic/Market Gauges:

  • North American Investment Grade CDS Index 53.8 +1.1%
  • BofA Private Credit Proxy Index 73.5 -.1% 
  • Bloomberg US Securitized MBS/ABS/CMBS Avg. OAS .22 unch.
  • BofA Global Financial Stress Indicator -.14 -1.0 basis point
  • European Financial Sector CDS Index 60.9 +3.3%
  • Emerging Market CDS Index 157.2 +.5%
  • Israel Sovereign CDS 65.8 +4.4% 
  • Bloomberg Global Trade Policy Uncertainty Index .7 -.1
  • US Morning Consult Daily Consume Sentiment Index 88.9 +2.2
  • Citi US Economic Surprise Index 40.6 +4.2
  • Citi Eurozone Economic Surprise Index -53.2 +4.7
  • Citi Emerging Markets Economic Surprise Index 49.4 -.5
  • S&P 500 Current Quarter EPS Growth Rate YoY(447 of 500 reporting) +25.2% -.1 percentage point
  • S&P 500 Blended Forward 12 Months Mean EPS Estimate 354.06 +.38:  Growth Rate +27.8% +.2 percentage point, P/E 20.8 -.2
  • S&P 500 Current Year Estimated Profit Margin 15.42% unch.
  • NYSE FANG+ Current Quarter EPS Growth Rate YoY(8 of 10 reporting) +62.1% unch.
  • NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 855.99 +3.02: Growth Rate +116.2% +.8 percentage point, P/E 19.9 -.5 
  • Bloomberg US Financial Conditions Index 1.0 -17.0 basis points
  • US Yield Curve 46.5 basis points (2s/10s) +.5 basis point
  • Bloomberg Industrial Metal Index 185.6 +.3%
  • Dutch TTF Nat Gas(European benchmark) 46.7 euros/megawatt-hour +1.0% 
  • US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 15.4% -1.6 percentage points
  • US Atlanta Fed GDPNow Q2 Forecast +3.7% unch.
  • US 10-Year T-Note Yield 4.46% +5.0 basis points
  • 1-Year TIPS Spread 3.21 +12.0 basis points
  • Highest target rate probability for July 29th FOMC meeting: 95.6% (+.5 percentage point) chance of 3.5%-3.75%. Highest target rate probability for Sept. 16th meeting: 87.6%(-2.8 percentage points) chance of 3.5%-3.75%. (current target rate is 3.5-3.75%)
Overseas Futures:
  • Nikkei 225 Futures: Indicating -510 open in Japan 
  • China A50 Futures: Indicating -31 open in China
  • DAX Futures: Indicating +150 open in Germany
Portfolio:
  • Slightly Higher: On gains in my energy/biotech sector longs, index hedges and emerging market shorts
  • Disclosed Trades: Added to my (IWM)/(QQQ) hedges, then covered some
  • Market Exposure: 75% Net Long

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