Stocks Reversing Higher into Final Hour on Rising Fed Rate-Cut Odds, US Government Reopening Hopes, Sector Rotation, Biotech/Energy Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Most Sectors Rising

• Volume: Around Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 17.5 -.8%
• S&P 500 Intraday % Swing .68 -58.0%
• Bloomberg Global Risk On/Risk Off Index 85.9 +.1% 
• Swiss Franc/Offshore Chinese Renminbi Cross 8.90 +.55%

• Euro/Yen Carry Return Index 202.3 +.3%

• Emerging Markets Currency Volatility(VXY) 6.2 -.6%

• CBOE S&P 500 Implied Correlation Index 15.3 +.44% 

• ISE Sentiment Index 159.0 +21.0

• Total Put/Call .74 -10.8%

• NYSE Arms .87 -42.8%
• NYSE Non-Block Money Flow +$137.7M 
  

Credit Investor Angst:

• North American Investment Grade CDS Index 51.75 unch.
  

• US Energy High-Yield OAS 348.25 unch.
• Bloomberg TRACE # Distressed Bonds Traded 245.0 -5.0

• European Financial Sector CDS Index 58.0 -.5%
  

• Italian/German 10Y Yld Spread 75.0 unch.

• Asia Ex-Japan Investment Grade CDS Index 65.6 -1.0%
  

• Emerging Market CDS Index 134.8 unch.

• China Corp. High-Yield Bond USD ETF(KHYB) 24.4 -.04%

• 2-Year SOFR Swap Spread -20.75 basis points unch.

• 3M T-Bill Treasury Repo Spread -6.25 basis points -4.0 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -2.5 unch.
• MBS  5/10 Treasury Spread 127.0 unch.
• Bloomberg CMBS Investment Grade Bbb Average OAS 611.0 unch.
• Avg. Auto ABS OAS 58.0 unch.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 36.3 +.1%
• US 10-Year T-Note Yield 4.12% unch.
• 3-Month T-Bill Yield 3.83% unch.

• China Iron Ore Spot 102.5 USD/Metric Tonne +.9%
• Dutch TTF Nat Gas(European benchmark) 31.1 euros/megawatt-hour +.1%

• Citi US Economic Surprise Index 11.1 unch.

• Citi Eurozone Economic Surprise Index 33.0 -1.0 point

• Citi Emerging Markets Economic Surprise Index 31.0 +.6
• S&P 500 Current Quarter EPS Growth Rate YoY(456 of 500 reporting) +11.7% n/a
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 301.45 +n/a:  Growth Rate +15.2% +n/a, P/E 22.6 -n/a
• S&P 500 Current Year Estimated Profit Margin 13.50% +1.0 basis point
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(7 of 10 reporting) +10.0% unch.
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 496.18 +n/a: Growth Rate +22.1% +n/a, P/E 33.7 +n/a
• Bloomberg US Financial Conditions Index .62 +11.0 basis points
• Bloomberg Euro-Zone Financial Conditions Index 1.49 +19.0 basis points
• Bloomberg Global Trade Policy Uncertainty Index 2.0 -.1 point
• US Yield Curve 52.5 basis points (2s/10s) unch.
• US Atlanta Fed GDPNow Q2 Forecast +4.0% unch.
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 34.0% -1.1 percentage points

• Cleveland Fed Inflation Nowcast Core PCE YoY +2.85% unch.: CPI YoY +2.96% unch.
• 1-Year TIPS Spread 2.69 unch.
• 10-Year TIPS Spread 2.30 unch.
• Highest target rate probability for Jan. 28th FOMC meeting: 53.2% (+.1 percentage point) chance of 3.5%-3.75%. Highest target rate probability for March 18th meeting: 38.9%(+3.8 percentage points) chance of 3.25%-3.5%. (current target rate is 3.75-4.0%)
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +348 open in Japan 
• China A50 Futures: Indicating +37 open in China

• DAX Futures: Indicating +151 open in Germany

Portfolio:

• Slightly Higher: On gains in my industrial/biotech/utility sector longs 
• Disclosed Trades: None
• Market Exposure: 100% Net Long