Stocks Lower into Afternoon on Fed Credibility Concerns, Escalating US/China Tensions, Earnings Outlook Worries, Tech/Consumer Discretionary 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) 19.7 +7.3%
• DJIA Intraday % Swing .69%
  
• Bloomberg Global Risk On/Risk Off Index 58.3 +.7%

• Euro/Yen Carry Return Index 147.67 +.39%

• Emerging Markets Currency Volatility(VXY) 10.6 +3.7%

• CBOE S&P 500 Implied Correlation Index 34.7 +4.3% 

• ISE Sentiment Index 103.0 +5.0 points
  

• Total Put/Call .79 -12.2%

• NYSE Arms .85 -26.1%

Credit Investor Angst:

• North American Investment Grade CDS Index 69.72 +1.5%
  

• US Energy High-Yield OAS 346.97 +.67%
• Bloomberg TRACE # Distressed Bonds Traded 307.0 -9.0
  

• European Financial Sector CDS Index 84.3 +4.2% 
• Credit Suisse Subordinated 5Y Credit Default Swap 360.8 +3.6%
  

• Italian/German 10Y Yld Spread 186.0 basis points +3.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 103.0 +5.6%
  

• Emerging Market CDS Index 224.72 +2.4%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 27.8 -.22%

• 2-Year Swap Spread 25.75 basis points -2.0 basis points
  

• TED Spread 20.0 basis points +3.5 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -9.0 +1.0 basis point
  
• MBS  5/10 Treasury Spread  138.0 +11.0 basis points
  
• Bloomberg US Agg CMBS Avg OAS 104.0 -1.0 basis point
  
• Avg. Auto ABS OAS .69 -1.0 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 48.0 -.69%
• 3-Month T-Bill Yield 4.64% unch.
  

• China Iron Ore Spot 122.0 USD/Metric Tonne -1.1%
• Dutch TTF Nat Gas(European benchmark) 58.1 euros/megawatt-hour +.4%

• Citi US Economic Surprise Index 21.90 +2.2 points

• Citi Eurozone Economic Surprise Index 100.6 +.5 point
  

• Citi Emerging Markets Economic Surprise Index 3.3 unch.
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 224.23 -.57:  Growth Rate +.4% -.2 percentage point, P/E 18.3 -.2
• S&P 500 Current Year Estimated Profit Margin 12.03% -20.0 basis points
  
• Bloomberg US Financial Conditions Index .41 -8.0 basis points
  
• Yield Curve -82.5 basis points (2s/10s) -5.25 basis points
• US Atlanta Fed 1Q GDPNow Forecast +.67% unch.
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +4.30% unch.: CPI YoY +6.44% unch.
  
• 10-Year TIPS Spread 2.26 +3.0 basis points
  
• Highest target rate probability for May 3rd FOMC meeting: 70.3%(+10.8 percentage points) chance of 5.0%-5.25%. Highest target rate probability for June 14th meeting: 54.9%(+0.0 percentage points) chance of 5.0%-5.25%.
  

US Covid-19:

• 84 new infections/100K people(last 7 days total). 4.8%(-0.0 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%(-2.5 percentage points) from peak 7-day avg. of 1/9/22 - 1/15/22
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +26 open in Japan 
• China A50 Futures: Indicating -2 open in China

• DAX Futures: Indicating +53 open in Germany

Portfolio:

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

• Disclosed Trades:  None
  

• Market Exposure: 25% Net Long