Stocks Lower into Final Hour on US Policy-Induced Stagflation Fears, Escalating Currency Crisis Worries, Surging European/Emerging Markets/US High-Yield Debt Angst, Airline/REIT Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Almost Every Sector Declining
  

• Volume:  Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 32.4 +8.2%
• DJIA Intraday % Swing 1.6%
  
• Bloomberg Global Risk On/Risk Off Index 46.1 +5.3%

• Euro/Yen Carry Return Index 143.24 +.11%

• Emerging Markets Currency Volatility(VXY) 12.1 +2.6%

• CBOE S&P 500 Implied Correlation Index 52.4 +4.7% 

• ISE Sentiment Index 105.0 +38.0 points
  

• Total Put/Call 1.11 -17.8%

• NYSE Arms 1.03 -18.3%

Credit Investor Angst:

• North American Investment Grade CDS Index 108.93 +3.4%
  

• US Energy High-Yield OAS 411.70 +.76%
• Bloomberg TRACE # Distressed Bonds Traded 393.0 +13.0
  

• European Financial Sector CDS Index 147.83 +3.7%
  

• Italian/German 10Y Yld Spread 245.0 basis points +13.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 162.40 +7.9%
  

• Emerging Market CDS Index 328.64 +3.5%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 26.3 -.08%

• 2-Year Swap Spread 35.25 basis points -5.25 basis points
  

• TED Spread 44.75 basis points -.5 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -27.5 basis points -3.0 basis points
  
• MBS  5/10 Treasury Spread  179.0 +16.0 basis points
  
• iShares CMBS ETF 45.85 -.58%
• Avg. Auto ABS OAS .62 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 47.15 -.96%
• 3-Month T-Bill Yield 3.24% +5.0 basis points
  

• Yield Curve -44.5 basis points (2s/10s) +6.5 basis points
  

• China Iron Ore Spot 96.4 USD/Metric Tonne +.2%
• Dutch TTF Nat Gas(European benchmark) 173.0 euros/megawatt-hour -6.8%

• Citi US Economic Surprise Index 10.9 unch.

• Citi Eurozone Economic Surprise Index -4.6 -8.7 points
  

• Citi Emerging Markets Economic Surprise Index -.7 -2.0 points
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 236.23 unch.:  Growth Rate +15.8% unch., P/E 15.5 -.1
  
• Bloomberg US Financial Conditions Index -1.15 -13.0 basis points
  
• US Atlanta Fed GDPNow Forecast +.31% unch.
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +4.68% unch.: CPI YoY +8.19% unch.
  
• 10-Year TIPS Spread 2.34 -2.0 basis points
  
• Highest target rate probability for December 14th FOMC meeting: 71.1%(+.5 percentage point) chance of 4.25%-4.5%. Highest target rate probability for February 1st meeting: 68.8%(+2.2 percentage points) chance of 4.5%-4.75%.
  

US Covid-19:

• 112 new infections/100K people(last 7 days total). 6.4%(-0.0 percentage point) of 1/14/22 peak(1,740) -0/100K people from prior report.
  
• New Covid-19 patient hospital admissions per 100K population -83.4%(-1.8 percentage point) from peak 7-day avg. of 1/9/22 - 1/15/22
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -101 open in Japan 
• China A50 Futures: Indicating +15 open in China

• DAX Futures: Indicating +7 open in Germany

Portfolio:

• Slightly Higher:  On gains in my index hedges and emerging market shorts
  

• Disclosed Trades:  None
  

• Market Exposure:  25% Net Long