Stocks Slightly Higher into Final Hour on Lower Long-Term Rates, Earnings Outlook Optimism, Sector Rotation, Healthcare/Financial Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Most Sectors Rising

• Volume: Around Average

• Market Leading Stocks: Outperforming

Equity Investor Angst:

• Volatility(VIX) 17.5 +1.0%
• S&P 500 Intraday % Swing .59 -42.8%
• Bloomberg Global Risk On/Risk Off Index 84.8 -1.3% 
• Swiss Franc/Offshore Chinese Renminbi Cross 8.92 +.22%

• Euro/Yen Carry Return Index 202.9 +.4%

• Emerging Markets Currency Volatility(VXY) 6.3 +.3%

• CBOE S&P 500 Implied Correlation Index 15.9 +3.5% 

• ISE Sentiment Index 153.0 -3.0

• Total Put/Call .78 -7.1%

• NYSE Arms .96 -4.0%
• NYSE Non-Block Money Flow -$5.5M 
  

Credit Investor Angst:

• North American Investment Grade CDS Index 52.2 +.8%
  

• US Energy High-Yield OAS 350.22 +.6%
• Bloomberg TRACE # Distressed Bonds Traded 245.0 unch.

• European Financial Sector CDS Index 57.6 -.7%
  

• Italian/German 10Y Yld Spread 73.0 -2.0 basis points

• Asia Ex-Japan Investment Grade CDS Index 65.0 -.8%
  

• Emerging Market CDS Index 134.4 -.3%

• China Corp. High-Yield Bond USD ETF(KHYB) 24.45 -.08%

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

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

• 3-Month EUR/USD Cross-Currency Basis Swap -3.25 -.75 basis point
• MBS  5/10 Treasury Spread 126.0 -1.0 basis point
• Bloomberg CMBS Investment Grade Bbb Average OAS 611.0 unch.
• Avg. Auto ABS OAS 58.0 unch.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 36.27 +.02%
• US 10-Year T-Note Yield 4.06% -6.0 basis points
• 3-Month T-Bill Yield 3.87% +4.0 basis points

• China Iron Ore Spot 102.2 USD/Metric Tonne -.6%
• Dutch TTF Nat Gas(European benchmark) 30.9 euros/megawatt-hour -.5%

• Citi US Economic Surprise Index 10.8 -.3 point

• Citi Eurozone Economic Surprise Index 33.6 +.6 point

• Citi Emerging Markets Economic Surprise Index 31.9 +.9
• S&P 500 Current Quarter EPS Growth Rate YoY(457 of 500 reporting) +11.7% unch.
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 301.53 +.08:  Growth Rate +15.2% unch., P/E 22.7 +.1
• S&P 500 Current Year Estimated Profit Margin 13.49% -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 496.61 +.43: Growth Rate +22.2% +.1 percentage point, P/E 33.5 -.2
• Bloomberg US Financial Conditions Index .63 +1.0 basis point
• Bloomberg Euro-Zone Financial Conditions Index 1.85 +36.0 basis points
• Bloomberg Global Trade Policy Uncertainty Index 2.0 unch.
• US Yield Curve 50.0 basis points (2s/10s) -2.5 basis points
• US Atlanta Fed GDPNow Q2 Forecast +4.0% unch.
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 35.9% +1.9 percentage points

• Cleveland Fed Inflation Nowcast Core PCE YoY +2.85% unch.: CPI YoY +2.96% unch.
• 1-Year TIPS Spread 2.65 -4.0 basis points
• 10-Year TIPS Spread 2.29 -1.0 basis point
• Highest target rate probability for Jan. 28th FOMC meeting: 52.4% (-.3 percentage point) chance of 3.5%-3.75%. Highest target rate probability for March 18th meeting: 38.5%(+.3 percentage point) chance of 3.5%-3.75%. (current target rate is 3.75-4.0%)
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +187 open in Japan 
• China A50 Futures: Indicating +17 open in China

• DAX Futures: Indicating +89 open in Germany

Portfolio:

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