Stocks Slightly Lower into Final Hour on US Policy-Induced Stagflation Fears, Earnings Outlook Worries, Technical Selling, Retail/Energy Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 14.1 -.71%
• DJIA Intraday % Swing .57% +53.7%
  
• Bloomberg Global Risk On/Risk Off Index 65.8 -3.5%

• Euro/Yen Carry Return Index 174.9 -.4%

• Emerging Markets Currency Volatility(VXY) 7.76 +.91%

• CBOE S&P 500 Implied Correlation Index 19.4 -7.2% 

• ISE Sentiment Index 107.0 -24.0
  

• Total Put/Call .93 +9.4%

• NYSE Arms 1.54 +126.4% 
• NYSE Non-Block Money Flow -$110.7M 
  

Credit Investor Angst:

• North American Investment Grade CDS Index 65.53 +.54%
  

• US Energy High-Yield OAS 350.9 +3.98%
• Bloomberg TRACE # Distressed Bonds Traded 346 -14
  

• European Financial Sector CDS Index 82.64 +1.4% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 254.41 +1.2%
  

• Italian/German 10Y Yld Spread 176.0 basis points -4.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 106.8 -.44%
  

• Emerging Market CDS Index 198.26 -.45%
• Israel Sovereign CDS 125.60 -.88%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 25.0 unch.

• 2-Year SOFR Swap Spread -17.25 basis points -.5 basis point
  

• TED Spread 23.5 basis points -.5 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -16.25 +1.75 basis points
  
• MBS  5/10 Treasury Spread 158.0 -5.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 942.0 +9.0 basis points
  
• Avg. Auto ABS OAS 97.0 -2.0 basis points
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 41.8 +.02%
• 3-Month T-Bill Yield 5.40% -1.0 basis point
  

• China Iron Ore Spot 131.0 USD/Metric Tonne +.03%
• Dutch TTF Nat Gas(European benchmark) 45.84 euros/megawatt-hour -2.5%

• Citi US Economic Surprise Index 34.2 -7.4 points

• Citi Eurozone Economic Surprise Index -40.5 +1.2 points

• Citi Emerging Markets Economic Surprise Index 22.3 -.4 point
• S&P 500 Current Quarter EPS Growth Rate YoY(468 of 500 reporting) +2.9% +.4 percentage point
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 240.79 +.76:  Growth Rate +9.0% +.3 percentage point, P/E 18.7 -.1
  
• S&P 500 Current Year Estimated Profit Margin 12.15% +4.0 basis points
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(7 of 10 reporting) +38.4% unch.
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 275.85 +.23: Growth Rate +62.7% +.1 percentage point, P/E 29.5 -.2
  
• Bloomberg US Financial Conditions Index .21 -2.0 basis points
  
• Bloomberg Euro-Zone Financial Conditions Index .28 +3.0 basis points
  
• US Yield Curve -39.25 basis points (2s/10s) unch.
  
• US Atlanta Fed 4Q GDPNow Forecast +2.20% unch.
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +3.55% unch.: CPI YoY +3.10% unch.
  
• 10-Year TIPS Spread 2.29 -3.0 basis points
  
• Highest target rate probability for Jan. 31st FOMC meeting: 97.8%(-2.2 percentage points) chance of 5.25%-5.5%. Highest target rate probability for March 20th meeting: 66.5%(-9.5 percentage point) chance of 5.25%-5.5%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -40 open in Japan 
• China A50 Futures: Indicating -66 open in China

• DAX Futures: Indicating +70 open in Germany

Portfolio:

• Higher:  On gains in my tech/utility/industrial sector longs, index hedges and emerging market shorts
  

• Disclosed Trades: None
  

• Market Exposure: 75% Net Long