Stocks Reversing Sharply Lower into Afternoon on US Policy-Induced Stagflation Fears, Fed "Behind the Curve" Worries, Escalating China Hard Landing Concerns, Tech/Commodity 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) 32.5 +1.8%
• DJIA Intraday % Swing 2.5%
  
• Bloomberg Global Risk On/Risk Off Index 49.0 +2.7%

• Euro/Yen Carry Return Index 149.31 +.6%

• Emerging Markets Currency Volatility(VXY) 12.6 unch.

• CBOE S&P 500 Implied Correlation Index 52.5 +1.8% 

• ISE Sentiment Index 99.0 +2.0 points
  

• Total Put/Call .79 -10.2%

• NYSE Arms 1.36 +172.0%

Credit Investor Angst:

• North American Investment Grade CDS Index 103.24 +1.9%
  

• US Energy High-Yield OAS 419.31 -.33%
• Bloomberg TRACE # Distressed Bonds Traded 445.0 +37.0
  

• European Financial Sector CDS Index 145.5 +1.3% 
• Credit Suisse Subordinated 5Y Credit Default Swap 436.0 -3.0%
  

• Italian/German 10Y Yld Spread 244.0 basis points +5.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 203.27 +4.2%
  

• Emerging Market CDS Index 334.05 +1.9%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 25.07 -.44%

• 2-Year Swap Spread 36.5 basis points +2.5 basis points
  

• TED Spread 36.0 basis points +7.25 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -69.75 basis points +.75 basis point
  
• MBS  5/10 Treasury Spread  177.0 +1.0 basis point
  
• iShares CMBS ETF 45.11-.7%
• Avg. Auto ABS OAS .83 +1.0 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 46.30 -.25%
• 3-Month T-Bill Yield 3.72% +5.0 basis points
  

• Yield Curve -48.5 basis points (2s/10s) +1.0 basis point
  

• China Iron Ore Spot 92.9 USD/Metric Tonne -.1%
• Dutch TTF Nat Gas(European benchmark) 142.0 euros/megawatt-hour -7.7%

• Citi US Economic Surprise Index 17.40 +4.0 points

• Citi Eurozone Economic Surprise Index 5.7 +.7 point
  

• Citi Emerging Markets Economic Surprise Index -3.7 +.5 point
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 235.15 -.18:  Growth Rate +15.5% +.2 percentage point, P/E 15.3 -.3
  
• Bloomberg US Financial Conditions Index -1.23 +3.0 basis points
  
• US Atlanta Fed GDPNow Forecast +2.89% unch.
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +5.16% +5.0 basis points: CPI YoY +8.13% -7.0 basis points
  
• 10-Year TIPS Spread 2.39 +6.0 basis points
  
• Highest target rate probability for December 14th FOMC meeting: 66.6%(+5.0 percentage points) chance of 4.5%-4.75%. Highest target rate probability for February 1st meeting: 53.7%(-1.3 percentage points) chance of 4.75%-5.0%.
  

US Covid-19:

• 84 new infections/100K people(last 7 days total). 4.8%(+.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 -84.8%(-.0 percentage point) from peak 7-day avg. of 1/9/22 - 1/15/22
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -370 open in Japan 
• China A50 Futures: Indicating -96 open in China

• DAX Futures: Indicating -5 open in Germany

Portfolio:

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

• Disclosed Trades:  Added to my (IWM)/(QQQ) hedges and to my emerging market shorts
  

• Market Exposure:  Moved to Market Neutral