Stocks Falling Sharply into Afternoon on US Policy-Induced Stagflation Fears, Fed "Behind the Curve" Worries, Earnings Outlook Concerns, Tech/Alt Energy 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) 31.6 +3.6%
• DJIA Intraday % Swing 1.26%
  
• Bloomberg Global Risk On/Risk Off Index 48.9 +2.7%

• Euro/Yen Carry Return Index 146.31 -.15%

• Emerging Markets Currency Volatility(VXY) 12.4 +1.5%

• CBOE S&P 500 Implied Correlation Index 50.5 +1.4% 

• ISE Sentiment Index 97.0 -8.0 points
  

• Total Put/Call .94 +5.6%

• NYSE Arms .93 -28.5%

Credit Investor Angst:

• North American Investment Grade CDS Index 100.6 +2.33%
  

• US Energy High-Yield OAS 403.13 +.64%
• Bloomberg TRACE # Distressed Bonds Traded 435.0 -13.0
  

• European Financial Sector CDS Index 146.15 +3.2% 
• Credit Suisse Subordinated 5Y Credit Default Swap 426.64 -6.3%
  

• Italian/German 10Y Yld Spread 251.0 basis points +8.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 180.65 +1.62%
  

• Emerging Market CDS Index 314.15 +2.55%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 25.48 -.33%

• 2-Year Swap Spread 32.0 basis points -3.5 basis points
  

• TED Spread 47.75 basis points +9.75 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -61.0 basis points -1.25 basis points
  
• MBS  5/10 Treasury Spread  173.0 +4.0 basis points
  
• iShares CMBS ETF 45.23 -.81%
• Avg. Auto ABS OAS .79 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 47.13 -.14%
• 3-Month T-Bill Yield 3.36% unch.
  

• Yield Curve -43.0 basis points (2s/10s) -.25 basis point
  

• China Iron Ore Spot 93.85 USD/Metric Tonne -.55%
• Dutch TTF Nat Gas(European benchmark) 156.20 euros/megawatt-hour -11.1%

• Citi US Economic Surprise Index 5.20 +.5 point

• Citi Eurozone Economic Surprise Index 1.9 +1.4 points
  

• Citi Emerging Markets Economic Surprise Index -2.9 +1.8 points
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 235.92 -.15:  Growth Rate +15.6% -.1 percentage point, P/E 15.5 -.4
  
• Bloomberg US Financial Conditions Index -1.14 -11.0 basis points
  
• US Atlanta Fed GDPNow Forecast +2.89% +19.0 basis points
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +5.11% unch.: CPI YoY +8.20% unch.
  
• 10-Year TIPS Spread 2.28 +7.0 basis points
  
• Highest target rate probability for December 14th FOMC meeting: 62.5%(-7.7 percentage points) chance of 4.25%-4.5%. Highest target rate probability for February 1st meeting: 59.1%(-2.5 percentage points) chance of 4.5%-4.75%.
  

US Covid-19:

• 77 new infections/100K people(last 7 days total). 4.4%(-.4 percentage point) of 1/14/22 peak(1,740) -7/100K people from prior report.
  
• New Covid-19 patient hospital admissions per 100K population -84.3%(-.4 percentage point) from peak 7-day avg. of 1/9/22 - 1/15/22
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -356 open in Japan 
• China A50 Futures: Indicating +216 open in China

• DAX Futures: Indicating -7 open in Germany

Portfolio:

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

• Disclosed Trades:  Added to my (IWM)/(QQQ) hedges
  

• Market Exposure:  Moved to Market Neutral