Stocks Substantially Higher into Afternoon on Diminished Earnings Outlook Fears, Flight to Safety from Emerging Markets, Short-Covering, Insurance/Telecom Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume:  Around Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 26.2 -4.5%
• DJIA Intraday % Swing 2.0%
  
• Bloomberg Global Risk On/Risk Off Index 45.6 +3.9%

• Euro/Yen Carry Return Index 151.77 +.78%

• Emerging Markets Currency Volatility(VXY) 12.8 +.16%

• CBOE S&P 500 Implied Correlation Index 53.4 +4.2% 

• ISE Sentiment Index 99.0 -8.0 points
  

• Total Put/Call .99 -6.6%%

• NYSE Arms 1.32 +36.5%

Credit Investor Angst:

• North American Investment Grade CDS Index 88.79 -4.7%
  

• US Energy High-Yield OAS 352.4 -6.6%
• Bloomberg TRACE # Distressed Bonds Traded 455.0 +5.0
  

• European Financial Sector CDS Index 121.91 -.6% 
• Credit Suisse Subordinated 5Y Credit Default Swap 331.9 +.2%
  

• Italian/German 10Y Yld Spread 207.0 basis points +2.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 222.84 +2.0%
  

• Emerging Market CDS Index 284.44 -.31%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 23.96 -.79%

• 2-Year Swap Spread 38.0 basis points +3.25 basis points
  

• TED Spread 37.0 basis points +1.0 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -51.75 basis points -5.0 basis points
  
• MBS  5/10 Treasury Spread  166.0 unch.
  
• Bloomberg US Agg CMBS Avg OAS 129.0 +2.0 basis points
  
• Avg. Auto ABS OAS 1.09 +2.0 basis points
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 46.54 -.20%
• 3-Month T-Bill Yield 4.03% +2.0 basis points
  

• Yield Curve -39.5 basis points (2s/10s) -1.75 basis points
  

• China Iron Ore Spot 77.5 USD/Metric Tonne -4.5%
• Dutch TTF Nat Gas(European benchmark) 109.50 euros/megawatt-hour +2.0%

• Citi US Economic Surprise Index 14.5 +.8 point

• Citi Eurozone Economic Surprise Index 9.0 +5.5 points
  

• Citi Emerging Markets Economic Surprise Index 8.3 +1.8 points
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 232.87 -.46:  Growth Rate +14.5% -.1 percentage point, P/E 16.7 +.3
  
• Bloomberg US Financial Conditions Index -1.04 +12.0 basis points
  
• US Atlanta Fed GDPNow Forecast +3.07% -2.0 basis points
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +5.16% unch.: CPI YoY +8.11% unch.
  
• 10-Year TIPS Spread 2.51 +4.0 basis points
  
• Highest target rate probability for December 14th FOMC meeting: 48.1%(-10.8 percentage points) chance of 4.25%-4.5%. Highest target rate probability for February 1st meeting: 45.5%(+5.1 percentage points) chance of 4.75%-5.0%.
  

US Covid-19:

• 77 new infections/100K people(last 7 days total). 4.4%(+1.6 percentage points) of 1/14/22 peak(1,740) +28/100K people from prior report.
  
• New Covid-19 patient hospital admissions per 100K population -84.9%(-.0 percentage point) from peak 7-day avg. of 1/9/22 - 1/15/22
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +360 open in Japan 
• China A50 Futures: Indicating +28 open in China

• DAX Futures: Indicating +86 open in Germany

Portfolio:

• Slightly Higher:  On gains in my industrial/tech/medical sector longs and emerging market shorts
  

• Disclosed Trades:  Covered some of  my (IWM)/(QQQ) hedges and then added some back
  

• Market Exposure:  Moved to 50% Net Long