Stocks Reversing Higher into Final Hour on Stable Long-Term Rates, Buyout Speculation, AI Implementation Optimism, Tech/Consumer Discretionary Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Modestly Lower
  

• Sector Performance: Most Sectors Rising
  

• Volume: Around Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 12.6 +2.4%
• DJIA Intraday % Swing .39% -31.2%
  
• Bloomberg Global Risk On/Risk Off Index 61.7 +1.4%

• Euro/Yen Carry Return Index 168.66 +.77%

• Emerging Markets Currency Volatility(VXY) 7.90 -.13%

• CBOE S&P 500 Implied Correlation Index 19.6 -3.4% 

• ISE Sentiment Index 150.0 +28.0
  

• Total Put/Call .94 +4.44%

• NYSE Arms .99 +51.5% 
• NYSE Non-Block Money Flow +$108.2M 
  

Credit Investor Angst:

• North American Investment Grade CDS Index 61.4 -.45%
  

• US Energy High-Yield OAS 359.59 +1.7%
• Bloomberg TRACE # Distressed Bonds Traded 361 -16.0
  

• European Financial Sector CDS Index 75.70 -.12% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 213.10 -3.9%
  

• Italian/German 10Y Yld Spread 180.0 basis points +5.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 99.57 -.09%
  

• Emerging Market CDS Index 184.42 -.56%
• Israel Sovereign CDS 114.53 +4.9%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 25.57 +.18%

• 2-Year SOFR Swap Spread -19.5 basis points unch.
  

• TED Spread 25.5 basis points +.25 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -10.5 -1.5 basis points
  
• MBS  5/10 Treasury Spread 148.0 -1.0 basis point
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 960.0 +8.0 basis points
  
• Avg. Auto ABS OAS 83.0 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 41.5 -.22%
• 3-Month T-Bill Yield 5.38% -1.0 basis point
  

• China Iron Ore Spot 134.3 USD/Metric Tonne -.52%
• Dutch TTF Nat Gas(European benchmark) 36.1 euros/megawatt-hour -6.4%

• Citi US Economic Surprise Index 17.2 -3.1 points

• Citi Eurozone Economic Surprise Index -19.4 +1.6 points

• Citi Emerging Markets Economic Surprise Index 24.8 -1.4 points
• S&P 500 Current Quarter EPS Growth Rate YoY(1 of 500 reporting) +10.1% n/a
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 242.88 +.53:  Growth Rate +11.5% +2.1 percentage points, P/E 19.0 +.1
  
• S&P 500 Current Year Estimated Profit Margin 12.11% unch.
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(0 of 10 reporting) +0.0% -0.0 percentage points
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 285.80 +6.88: Growth Rate +37.2% +3.2 percentage points, P/E 28.4 -.5
  
• Bloomberg US Financial Conditions Index .60 -1.0 basis point
  
• Bloomberg Euro-Zone Financial Conditions Index .34 +2.0 basis points
  
• US Yield Curve -49.25 basis points (2s/10s) -.5 basis point
  
• US Atlanta Fed 4Q GDPNow Forecast +1.25% unch.
  
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 52.2% -5.3 percentage points
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +3.46% unch.: CPI YoY +3.04% unch.
  
• 10-Year TIPS Spread 2.20 -1.0 basis point
  
• Highest target rate probability for Jan. 31st FOMC meeting: 94.4%(+1.2 percentage points) chance of 5.25%-5.5%. Highest target rate probability for March 20th meeting: 55.4%(+2.0 percentage points) chance of 5.25%-5.5%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +302 open in Japan 
• China A50 Futures: Indicating +28 open in China

• DAX Futures: Indicating +41 open in Germany

Portfolio:

• Higher:  On gains in my industrial/tech/transport sector longs
  

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

• Market Exposure: Moved to 100% Net Long