Stocks Lower into Afternoon on US Policy-Induced Stagflation Fears, China Hard Landing Worries, Earnings Outlook Jitters, Tech/Commodity Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Lower Lower
  

• Sector Performance: Almost Every Sector Declining
  

• Volume:  Around Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 26.6 +2.7%
• DJIA Intraday % Swing .75% -35.6%
  
• Bloomberg Global Risk On/Risk Off Index 40.4 +.3%

• Euro/Yen Carry Return Index 143.46 -.26%

• Emerging Markets Currency Volatility(VXY) 11.7 +.6%

• CBOE S&P 500 Implied Correlation Index 46.4 +2.4% 

• ISE Sentiment Index 92.0 -6.0 points
  

• Total Put/Call .99 -9.2%

• NYSE Arms 1.01 +11.0%

Credit Investor Angst:

• North American Investment Grade CDS Index 92.73 +.6%
  

• US Energy High-Yield OAS 430.94 +1.7%
• Bloomberg TRACE # Distressed Bonds Traded 383.0 +19.0
  

• European Financial Sector CDS Index 131.42 +.9%

• Italian/German 10Y Yld Spread 237.0 basis points +2.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 144.40 +3.7%
  

• Emerging Market CDS Index 329.87 +.9%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 26.51 -.33%

• 2-Year Swap Spread 34.75 basis points -2.0 basis points
  

• TED Spread 15.25 basis points -2.75 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -16.0 basis points -1.5 basis points
  
• MBS  5/10 Treasury Spread  147.0 +6.0 basis points
  
• iShares CMBS ETF 47.17 -.38%
• Avg. Auto ABS OAS .74 -5.0 basis points
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 48.50 -.47%
• 3-Month T-Bill Yield 2.93% +2.0 basis points
  

• Yield Curve -26.0 basis points (2s/10s) +6.0 basis points
  

• China Iron Ore Spot 95.2 USD/Metric Tonne -5.3%
• Dutch TTF Nat Gas(European benchmark) 252.0 euros/megawatt-hour +5.0%

• Citi US Economic Surprise Index -20.9 +6.7 points

• Citi Eurozone Economic Surprise Index -17.6 +7.8 points
  

• Citi Emerging Markets Economic Surprise Index 12.0 +3.2 points
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 237.16 +.10:  Growth Rate +16.0% unch., P/E 16.6 -.2 point
  
• Bloomberg US Financial Conditions Index -.36 +5.0 basis points
  
• US Atlanta Fed GDPNow Forecast +2.59% +102.0 basis points
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +4.62% unch.: CPI YoY +8.24% unch.
  
• 10-Year TIPS Spread 2.46 -5.0 basis points
  
• Highest target rate probability for November 2nd FOMC meeting: 75.3%(+13.3 percentage points) chance of 3.5%-3.75%. Highest target rate probability for December 14th meeting: 70.0%(+8.0 percentage points) chance of 3.75%-4.0%.
  

US Covid-19:

• 182 new infections/100K people(last 7 days total). 10.5%(+.5 percentage point) of 1/14/22 peak(1,740) +7/100K people from prior report.
  
• New Covid-19 patient hospital admissions per 100K population -76.3%(-.8 percentage point) from peak 7-day avg. of 1/9/22 - 1/15/22
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -26 open in Japan 
• China A50 Futures: Indicating +6 open in China

• DAX Futures: Indicating +63 open in Germany

Portfolio:

• Slightly Higher:  On gains in my medical sector longs, emerging market shorts and index hedges
  

• Disclosed Trades:  Covered some of my (IWM)/(QQQ) hedges
  

• Market Exposure:  Moved to 50% Net Long