Stocks Lower into Afternoon on US Policy-Induced Stagflation Fears, China Hard-Landing Worries, Rising European/Emerging Markets/US High-Yield Debt Angst, Tech/Homebuilding Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Modestly Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume:  Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 26.2 +1.7%
• DJIA Intraday % Swing .91%
  
• Bloomberg Global Risk On/Risk Off Index 46.6 +2.2%

• Euro/Yen Carry Return Index 151.62 -.17%

• Emerging Markets Currency Volatility(VXY) 12.7 -1.1%

• CBOE S&P 500 Implied Correlation Index 53.0 +.08% 

• ISE Sentiment Index 96.0 +6.0 points
  

• Total Put/Call .87 -7.5%

• NYSE Arms .87 -19.8%

Credit Investor Angst:

• North American Investment Grade CDS Index 89.70 +1.6%
  

• US Energy High-Yield OAS 356.72 +.94%
• Bloomberg TRACE # Distressed Bonds Traded 457.0 +2.0
  

• European Financial Sector CDS Index 123.4 +1.3% 
• Credit Suisse Subordinated 5Y Credit Default Swap 333.64 +.2%
  

• Italian/German 10Y Yld Spread 216.0 basis points +9.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 231.40 +4.1%
  

• Emerging Market CDS Index 294.77 +3.6%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 24.06 +.35%

• 2-Year Swap Spread 37.25 basis points -.75 basis point
  

• TED Spread 39.5 basis points +2.5 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -55.0 basis points -3.25 basis points
  
• MBS  5/10 Treasury Spread  170.0 +4.0 basis points
  
• Bloomberg US Agg CMBS Avg OAS 130.0 +1.0 basis point
  
• Avg. Auto ABS OAS 1.09 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 46.54 -.20%
• 3-Month T-Bill Yield 4.06% +3.0 basis points
  

• Yield Curve -44.25 basis points (2s/10s) -4.75 basis points
  

• China Iron Ore Spot 75.25 USD/Metric Tonne -2.1%
• Dutch TTF Nat Gas(European benchmark) 122.0 euros/megawatt-hour +12.4%

• Citi US Economic Surprise Index 8.1 -6.4 points

• Citi Eurozone Economic Surprise Index 18.2 +9.2 points
  

• Citi Emerging Markets Economic Surprise Index 7.2 -1.1 points
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 232.30 -.57:  Growth Rate +13.1% -1.4 percentage points, P/E 16.7 unch.
  
• Bloomberg US Financial Conditions Index -1.03 +4.0 basis points
  
• US Atlanta Fed GDPNow Forecast +3.07% unch.
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +5.16% unch.: CPI YoY +8.11% unch.
  
• 10-Year TIPS Spread 2.51 unch.
  
• Highest target rate probability for December 14th FOMC meeting: 49.5%(+6.1 percentage points) chance of 4.5%-4.75%. Highest target rate probability for February 1st meeting: 47.1%(+1.9 percentage points) chance of 4.75%-5.0%.
  

US Covid-19:

• 77 new infections/100K people(last 7 days total). 4.4%(+0.0 percentage points) of 1/14/22 peak(1,740) +0/100K people from prior report.
  
• New Covid-19 patient hospital admissions per 100K population -86.0%(-1.1 percentage points) from peak 7-day avg. of 1/9/22 - 1/15/22
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -42 open in Japan 
• China A50 Futures: Indicating +1 open in China

• DAX Futures: Indicating +33 open in Germany

Portfolio:

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

• Disclosed Trades:  None
  

• Market Exposure:  50% Net Long