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

Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Above Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 12.7 -.9%
• DJIA Intraday % Swing .48% +23.7%
  
• Bloomberg Global Risk On/Risk Off Index 57.9 -1.1%

• Euro/Yen Carry Return Index 170.1 -.1%

• Emerging Markets Currency Volatility(VXY) 7.90 +.1%

• CBOE S&P 500 Implied Correlation Index 21.1 +.6% 

• ISE Sentiment Index 153.0 +19.0
  

• Total Put/Call .80 -11.1%

• NYSE Arms 1.30 -32.3% 
• NYSE Non-Block Money Flow +$81.0M 
  

Credit Investor Angst:

• North American Investment Grade CDS Index 62.69 +.15%
  

• US Energy High-Yield OAS 352.6 +1.0%
• Bloomberg TRACE # Distressed Bonds Traded 364 +3.0
  

• European Financial Sector CDS Index 76.1 -.8% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 231.36 -1.7%
  

• Italian/German 10Y Yld Spread 174.0 basis points unch.
  

• Asia Ex-Japan Investment Grade CDS Index 100.14 +.23%
  

• Emerging Market CDS Index 185.86 -.06%
• Israel Sovereign CDS 114.50 +.29%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 25.5 +.05%

• 2-Year SOFR Swap Spread -18.75 basis points +1.0 basis point
  

• TED Spread 24.0 basis points -.5 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -9.75 +1.0 basis point
  
• MBS  5/10 Treasury Spread 150.0 -3.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 949.0 -1.0 basis point
  
• Avg. Auto ABS OAS 85.0 -1.0 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 41.6 +.02%
• 3-Month T-Bill Yield 5.40% +5.0 basis points
  

• China Iron Ore Spot 131.0 USD/Metric Tonne -.5%
• Dutch TTF Nat Gas(European benchmark) 39.3 euros/megawatt-hour +3.1%

• Citi US Economic Surprise Index 12.2 -2.1 points

• Citi Eurozone Economic Surprise Index -20.6 -6.7 points

• Citi Emerging Markets Economic Surprise Index 25.1 +.6 point
• S&P 500 Current Quarter EPS Growth Rate YoY(494 of 500 reporting) +4.5% unch.
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 242.39 +.47:  Growth Rate +9.5% -1.3 percentage points, P/E 18.9 unch.
  
• S&P 500 Current Year Estimated Profit Margin 12.13% unch.
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(9 of 10 reporting) +50.6% unch.
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 285.37 +.16: Growth Rate +33.9% +.1 percentage point, P/E 28.6 +.1
  
• Bloomberg US Financial Conditions Index .53 +6.0 basis points
  
• Bloomberg Euro-Zone Financial Conditions Index .25 -2.0 basis points
  
• US Yield Curve -48.75 basis points (2s/10s) -7.0 basis points
  
• US Atlanta Fed 4Q GDPNow Forecast +1.27% +8.0 basis points
  
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 57.7% +1.2 percentage points
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +3.46% unch.: CPI YoY +3.04% unch.
  
• 10-Year TIPS Spread 2.15 -5.0 basis points
  
• Highest target rate probability for Jan. 31st FOMC meeting: 85.9%(+5.1 percentage points) chance of 5.25%-5.5%. Highest target rate probability for March 20th meeting: 53.4%(-.1 percentage point) chance of 5.0%-5.25%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -210 open in Japan 
• China A50 Futures: Indicating -34 open in China

• DAX Futures: Indicating +32 open in Germany

Portfolio:

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

• Disclosed Trades: None
  

• Market Exposure: 75% Net Long