Stocks Reversing Slightly Lower into Close on US Policy-Induced Stagflation Fears, China Economy Worries, Month-End Positioning, Healthcare/Gambling Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Above Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 12.9 +1.6%
• DJIA Intraday % Swing .29% -50.6%
  
• Bloomberg Global Risk On/Risk Off Index 61.0 -4.8%

• Euro/Yen Carry Return Index 173.2 -.23%

• Emerging Markets Currency Volatility(VXY) 7.72 +.26%

• CBOE S&P 500 Implied Correlation Index 20.4 +4.0% 

• ISE Sentiment Index 154.0 +16.0
  

• Total Put/Call .76 -21.7%

• NYSE Arms 1.13 +19.0% 
• NYSE Non-Block Money Flow +$177.3M 
  

Credit Investor Angst:

• North American Investment Grade CDS Index 62.6 -1.0%
  

• US Energy High-Yield OAS 334.94 -2.8%
• Bloomberg TRACE # Distressed Bonds Traded 327 -1.0
  

• European Financial Sector CDS Index 77.3 -2.7% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 242.3 -2.8%
  

• Italian/German 10Y Yld Spread 174.0 basis points -2.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 98.7 -1.1%
  

• Emerging Market CDS Index 185.48 -2.0%
• Israel Sovereign CDS 114.75 -3.0%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 25.4 unch.

• 2-Year SOFR Swap Spread -16.0 basis points -1.25 basis points
  

• TED Spread 25.75 basis points +1.25 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -14.5 +1.0 basis point
  
• MBS  5/10 Treasury Spread 154.0 +1.0 basis point
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 946.0 unch.
  
• Avg. Auto ABS OAS 91.0 -3.0 basis points
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 41.87 -.12%
• 3-Month T-Bill Yield 5.40% -1.0 basis point
  

• China Iron Ore Spot 127.7 USD/Metric Tonne -.67%
• Dutch TTF Nat Gas(European benchmark) 40.4 euros/megawatt-hour -5.6%

• Citi US Economic Surprise Index 28.0 +.5 point

• Citi Eurozone Economic Surprise Index -13.7 +3.5 points

• Citi Emerging Markets Economic Surprise Index 20.5 -1.4 points
• S&P 500 Current Quarter EPS Growth Rate YoY(487 of 500 reporting) +4.3% unch.
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 241.93 -.21:  Growth Rate +9.3% -.1 percentage point, P/E 18.9 unch.
  
• S&P 500 Current Year Estimated Profit Margin 12.14% unch.
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(8 of 10 reporting) +50.6% unch.
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 283.86 +.68: Growth Rate +33.4% +.3 percentage point, P/E 29.2 unch.
  
• Bloomberg US Financial Conditions Index .40 -7.0 basis points
  
• Bloomberg Euro-Zone Financial Conditions Index .24 -4.0 basis points
  
• US Yield Curve -38.5 basis points (2s/10s) +2.25 basis points
  
• US Atlanta Fed 4Q GDPNow Forecast +2.10% unch.
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 58.0% +8.4 percentage points
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +3.55% unch.: CPI YoY +3.04% unch.
  
• 10-Year TIPS Spread 2.22 -2.0 basis points
  
• Highest target rate probability for Jan. 31st FOMC meeting: 92.0%(-3.6 percentage points) chance of 5.25%-5.5%. Highest target rate probability for March 20th meeting: 49.8%(-12.8 percentage points) chance of 5.25%-5.5%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -46 open in Japan 
• China A50 Futures: Indicating +14 open in China

• DAX Futures: Indicating +35 open in Germany

Portfolio:

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

• Disclosed Trades: None
  

• Market Exposure: 75% Net Long