Stocks Reversing Lower into Final Hour on US Policy-Induced Stagflation Fears, Fed "Behind the Curve" Worries, Earnings Outlook Jitters, Consumer Discretionary/Biotech Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Almost Every Sector Declining
  

• Volume:  Around Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 31.5 +3.3%
• DJIA Intraday % Swing 1.4%
  
• Bloomberg Global Risk On/Risk Off Index 48.4 -.9%

• Euro/Yen Carry Return Index 150.96 -.53%

• Emerging Markets Currency Volatility(VXY) 12.6 +1.7%

• CBOE S&P 500 Implied Correlation Index 52.3 +2.0% 

• ISE Sentiment Index 99.0 +21.0 points
  

• Total Put/Call .98 +3.2%

• NYSE Arms 1.05 +82.8%

Credit Investor Angst:

• North American Investment Grade CDS Index 96.91 +2.1%
  

• US Energy High-Yield OAS 396.86 -.18%
• Bloomberg TRACE # Distressed Bonds Traded 441.0 +14.0
  

• European Financial Sector CDS Index 137.94 +.8% 
• Credit Suisse Subordinated 5Y Credit Default Swap 349.9 +1.2%
  

• Italian/German 10Y Yld Spread 240.0 basis points -1.0 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 204.82 -.47%
  

• Emerging Market CDS Index 323.2 +1.64%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 24.71 -.28%

• 2-Year Swap Spread 36.5 basis points unch.
  

• TED Spread 27.0 basis points -3.25 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -58.5 basis points +5.0 basis points
  
• MBS  5/10 Treasury Spread  172.0 +1.0 basis point
  
• iShares CMBS ETF 45.19 -.35%
• Avg. Auto ABS OAS .90 +2.0 basis points
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 46.24 -.48%
• 3-Month T-Bill Yield 3.97% +11.0 basis points
  

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

• China Iron Ore Spot 91.70 USD/Metric Tonne -.38%
• Dutch TTF Nat Gas(European benchmark) 118.0 euros/megawatt-hour +4.2%

• Citi US Economic Surprise Index 23.5 +1.2 points

• Citi Eurozone Economic Surprise Index 18.6 +5.1 points
  

• Citi Emerging Markets Economic Surprise Index -7.3 -.3 point
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 234.61 -.21:  Growth Rate +15.3% +.1 percentage point, P/E 15.7 -.2
  
• Bloomberg US Financial Conditions Index -1.07 +12.0 basis points
  
• US Atlanta Fed GDPNow Forecast +2.85% +4.0 basis points
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +5.16% unch.: CPI YoY +8.14% +1.0 basis point
  
• 10-Year TIPS Spread 2.42 unch.
  
• Highest target rate probability for December 14th FOMC meeting: 75.0%(+10.7 percentage points) chance of 4.5%-4.75%. Highest target rate probability for February 1st meeting: 52.2%(-2.1 percentage points) chance of 4.75%-5.0%.
  

US Covid-19:

• 77 new infections/100K people(last 7 days total). 4.4%(-.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 -84.9%(+.3 percentage point) from peak 7-day avg. of 1/9/22 - 1/15/22
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -272 open in Japan 
• China A50 Futures: Indicating -90 open in China

• DAX Futures: Indicating -7 open in Germany

Portfolio:

• 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 25% Net Long