Monday, May 04, 2026

Stocks Reversing Lower into Final Hour on Mideast War Resumption Fears, Higher Long-Term Rates, Technical Selling, Homebuilding/Transport Sector Weakness

Economic/Market Gauges:

  • North American Investment Grade CDS Index 55.0 +1.6%
  • BofA Private Credit Proxy Index 78.4 +.2% 
  • Bloomberg US Securitized MBS/ABS/CMBS Avg. OAS .22 -3.0 basis points
  • BofA Global Financial Stress Indicator .00 unch.
  • European Financial Sector CDS Index 61.7 +.8%
  • Emerging Market CDS Index 163.8 +3.1%
  • Israel Sovereign CDS 66.9 -1.5% 
  • Bloomberg Global Trade Policy Uncertainty Index .7 +.1
  • US Morning Consult Daily Consume Sentiment Index 85.8 -5.5
  • Citi US Economic Surprise Index 31.9 +11.8
  • Citi Eurozone Economic Surprise Index -62.6 +8.2
  • Citi Emerging Markets Economic Surprise Index 46.5 -2.4
  • S&P 500 Current Quarter EPS Growth Rate YoY(320 of 500 reporting) +28.0% -2.1 percentage points
  • S&P 500 Blended Forward 12 Months Mean EPS Estimate 349.59 +4.66:  Growth Rate +26.1% +1.6 percentage points, P/E 20.6 -.2
  • S&P 500 Current Year Estimated Profit Margin 15.28% +15.0 basis points
  • NYSE FANG+ Current Quarter EPS Growth Rate YoY(7 of 10 reporting) +61.9% -10.8 percentage points
  • NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 841.66 +15.97: Growth Rate +112.6% +4.0 percentage points, P/E 19.6 +.2 
  • Bloomberg US Financial Conditions Index .96 +4.0 basis points
  • US Yield Curve 48.0 basis points (2s/10s) -2.5 basis points
  • Bloomberg Industrial Metal Index 176.1 -.9%
  • Dutch TTF Nat Gas(European benchmark) 48.6 euros/megawatt-hour +6.3% 
  • US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 16.4% -.8 percentage point
  • US Atlanta Fed GDPNow Q2 Forecast +3.5% -20.0 basis points
  • US 10-Year T-Note Yield 4.44% +7.0 basis points
  • 1-Year TIPS Spread 3.34 +8.0 basis points
  • Highest target rate probability for July 29th FOMC meeting: 93.6% (+4.3 percentage points) chance of 3.5%-3.75%. Highest target rate probability for Sept. 16th meeting: 91.4%(+5.9 percentage points) chance of 3.5%-3.75%. (current target rate is 3.5-3.75%)
Overseas Futures:
  • Nikkei 225 Futures: Indicating -60 open in Japan 
  • China A50 Futures: Indicating -43 open in China
  • DAX Futures: Indicating +10 open in Germany
Portfolio:
  • Higher: On gains in my tech/biotech/energy sector longs, index hedges and emerging market shorts
  • Disclosed Trades: Added to my (IWM)/(QQQ) hedges and to my emerging market shorts
  • Market Exposure: Moved to 50% Net Long

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