3 Things… 

1. Trends/Bonds: S&P500 fell to over 12% below its 200, maintaining its well-established downtrend as momentum turns to the downside; NASDAQ fell to 20% below its 200, strong downtrend, momentum evaporated; 13% of the NASDAQ and 26% of the S&P500 are above their 200-Days; 23% and 13%, respectively, are above their 50-Days; Bulls21:Bears47; VIX 28.91; [1] The yield on the benchmark 10-year Treasury note rose to 3.17%. 2yr/10yr hit 0.93. The yield on the 30-year Treasury bond moved higher to 3.22%. Yields move inversely to prices and 1 basis point is equal to 0.01%. [2]
2. Sectors: Best 1-month sectors: Staples  (-0.35%), Utilities (-0.58%), Healthcare (-1.41%), Real Estate (-2.09); Crypto/Bitcoin falls to $28,968.37; [3]
3. Structured Note Values
   1. KRE Pricing Value 2/28/22: 73.49, Current 59.74-Delta -18.71%
   2. XLE/XOP Lowest, XLE Pricing Value 3/25/22: 78.75, Current: 88.46, Delta +12.33%; XOP Observation Value 3/25/22: 138.60, Current Value: 161.26-Delta +16.35%
   3. Lower of GDX/GDXJ; GDX Pricing Value: 4/29/22: 34.99, Current: 32.40 Delta -7.40%; GDXJ Pricing Value 4/29/22: 42.95, Current: 40.13 Delta -6.57%
   4. Lower of GDX/GDXJ; GDX Pricing Value: 5/26/22: 32.39, Current: 32.40 Delta +0.31%; GDXJ Pricing Value 5/26/22: 39.67, Current: 40.13 Delta +1.16% [4]

This Week’s Quotable

“He needs to regain control of the inflation narrative … now he’s losing total control. He’s got to move because, if he doesn’t, he’s going to be chasing the market and he’s not going to get there.” Noted Economist and Allianz Advisor Mohamed El-Erian on CNBC’s “Squawk Box” about Fed Chair Jerome Powell. Friday. [5]

Recent Highlights

•  CPI increased 8.6%, Core CPI increased 6% (06/10)
• Crude Inventories increased by 2 million bpd (06/08)
• Initial Claims increased by 27,000 (06/09)
• Consumer Credit increased 10.1% (06/07)

In the Markets

U.S. stocks ended sharply lower on Thursday as investors worried about the state of the economy ahead of the release of the key inflation report. All the major indexes ended in negative territory.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) slipped 1.9% or 638.11 points to end at 32,272.79 points.
The S&P 500 declined 2.4% or 97.95 points to finish at 4,017.82 points. Communication, technology and financial stocks were the worst performers
The Communication Services Select Sector SPDR (XLC) shed 3.1%. The Technology Select Sector SPDR (XLK) and the Financials Select Sector SPDR (XLF) declined 2.7% and 2.5%, respectively. All the 11 sectors of the benchmark index ended in negative territory.
The tech-heavy Nasdaq tumbled 2.8% or 332.05 points to close at 11,754 points. All the three indexes recorded their worst daily percentage declines since May 18.
The fear-gauge CBOE Volatility Index (VIX) was up 8.89% to 26.09. Decliners outnumbered advancers on the NYSE by a 5.51-to-1 ratio. On Nasdaq, a 2.79-to-1 ratio favored declining issues. A total of 11.50 billion shares were traded on Thursday, lower than the last 20-session average of 12.07 billion.

Stocks slide on Inflation Worries

Investors have been worrying ahead of the release of the May consumer-price index report. They are now nervous about a potential economic slowdown in the wake of the Fed’s aggressive stance toward tightening the monetary policy to check surging inflation.
On Thursday, worries grew further ahead of Friday morning’s release of the key inflation data. Investors are almost sure that the consumer-price index will reflect a massive jump for May. The yearly rate fell slightly in April to 8.3% but prior to that, the March reading of 8.5% was the highest in four decades.
Rising costs have been crippling industries. Moreover, supply disruption owing to the pandemic and the ongoing war between Russia and Ukraine has already pushed up prices. Oil prices are at a three-month high, which pushing transportation costs, that are biting into the profits of manufacturers and retailers.

Economic Data

Economic data released on Thursday also wasn’t impressive Initial jobless claims rose to 229,000, increasing 27,000 for the week ending Jun 4, the Labor Department said. This is the highest level since Jan 15. The four-week moving average also increased to 215,000, an increase of 8,000 from the previous week’s revised average of 207,000.

Continuing claims came in at 1,306,000, unchanged from the previous week’s revised level, the lowest level since December 1969. The previous week’s numbers were revised down by 3,000 from 1,309,000 to 1,342,000. The 4-week moving average came in at 1,317,500, a decrease of 9,000 from the previous week’s revised average.

A separate report showed that the net worth of total U.S. households declined $5.4 billion to $149.2 trillion. [6]

Sources: [1][3][4] Stockcharts.com; [2] CNBC.com; [5] Dow falls 200 points, Nasdaq loses 2% as investors weigh rising rates and strong jobs report (cnbc.com); [6] Zacks Professional Services, “Today’s Key Market and Economic News” for Friday May 27, 2022;