Stocks Lower into Final Hour on US Policy-Induced Stagflation Fears, Earnings Outlook Worries, Technical Selling, Technology/Consumer Discretionary Sector Weakness

 

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume:  Around Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 20.5 +.7%
• DJIA Intraday % Swing .71%
  
• Bloomberg Global Risk On/Risk Off Index 53.1 -.1%

• Euro/Yen Carry Return Index 144.2 -.1%

• Emerging Markets Currency Volatility(VXY) 10.7 +.7%

• CBOE S&P 500 Implied Correlation Index 38.5 -1.4% 

• ISE Sentiment Index 99.0 +1.0
  

• Total Put/Call .99 -19.5%

• NYSE Arms 1.21 -57.8%

Credit Investor Angst:

• North American Investment Grade CDS Index 74.85 +1.8%
  

• US Energy High-Yield OAS 368.39 +2.6%
• Bloomberg TRACE # Distressed Bonds Traded 328.0 unch.
  

• European Financial Sector CDS Index 91.03 +4.69% 
• Credit Suisse Subordinated 5Y Credit Default Swap 371.43 +2.7%
  

• Italian/German 10Y Yld Spread 171.0 basis points -3.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 105.2 +.8%
  

• Emerging Market CDS Index 230.9 +.50%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 27.98 +.05%

• 2-Year Swap Spread 26.5 basis points -1.0 basis point
  

• TED Spread 16.0 basis points +1.5 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -13.5 +1.25 basis points
  
• MBS  5/10 Treasury Spread  136.0 +2.0 basis points
  
• Bloomberg US Agg CMBS Avg OAS 111.0 +1.0 basis point
  
• Avg. Auto ABS OAS .77 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 48.4 -.06%
• 3-Month T-Bill Yield 4.64% +1.0 basis point
  

• China Iron Ore Spot 125.6 USD/Metric Tonne +1.5%
• Dutch TTF Nat Gas(European benchmark) 60.7 euros/megawatt-hour -1.6%

• Citi US Economic Surprise Index -19.0 +5.7 points

• Citi Eurozone Economic Surprise Index 87.9 -.3 point
  

• Citi Emerging Markets Economic Surprise Index 7.8 unch.
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 228.44 -.12:  Growth Rate +10.8% -.1 percentage point, P/E 17.2 -.1
  
• Bloomberg US Financial Conditions Index .17 +4.0 basis points
  
• Yield Curve -72.5 basis points (2s/10s) -2.0 basis points
• US Atlanta Fed GDPNow Forecast +3.53% +4.0 basis points
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +4.45% unch.: CPI YoY +6.34% unch.
  
• 10-Year TIPS Spread 2.23 +10.0 basis points
  
• Highest target rate probability for March 22nd FOMC meeting: 74.8%(+3.5 percentage points) chance of 4.75%-5.0%. Highest target rate probability for May 3rd meeting: 55.4%(-3.1 percentage points) chance of 4.75%-5.0%.
  

US Covid-19:

• 126 new infections/100K people(last 7 days total). 7.2%(-.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 -77.5%(+.5 percentage point) from peak 7-day avg. of 1/9/22 - 1/15/22
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +3 open in Japan 
• China A50 Futures: Indicating +56 open in China

• DAX Futures: Indicating +118 open in Germany

Portfolio:

• Slightly Higher:  On gains in my commodity/medical sector longs and index hedges
  

• Disclosed Trades:  Covered some of my (IWM)/(QQQ) hedges
  

• Market Exposure: Moved to 50% Net Long