Stocks Lower into Final Hour on Mideast War-Induced Inflation Fears, Rising Fed Rate-Hike Odds, AI Infrastructure Build-Out Worries, Tech/Alt Energy Sector Weakness

Economic/Market Gauges:

• North American Investment Grade CDS Index 59.7 +.7%
• BofA Private Credit Proxy Index 69.4 +.1% 
• Bloomberg US Securitized MBS/ABS/CMBS Avg. OAS .33 unch.
• BofA Global Financial Stress Indicator .08 -12.0 basis points
• European Financial Sector CDS Index 67.80 +.2% 
• Emerging Market CDS Index 160.9 +1.4% 
• Israel Sovereign CDS 56.5 -2.5% 
• Bloomberg Global Trade Policy Uncertainty Index .7 -.1
• US Morning Consult Daily Consume Sentiment Index 88.1 +3.3

• Citi US Economic Surprise Index 73.6 +4.1

• Citi Eurozone Economic Surprise Index -2.5 -.5

• Citi Emerging Markets Economic Surprise Index 37.5 -1.3
• S&P 500 Current Quarter EPS Growth Rate YoY(451 of 500 reporting) +27.1% +.7 percentage point
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 416.41 +.33:  Growth Rate +27.0% +.1 percentage point, P/E 18.0 -.1
• S&P 500 Current Year Estimated Profit Margin 16.32% -2.0 basis points
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(8 of 10 reporting) +34.9% unch.
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 1,106.67 +.80: Growth Rate +64.8% +.1 percentage point, P/E 15.5 -.2
• Bloomberg US Financial Conditions Index .81 +32.0 basis points
• US Yield Curve 25.5 basis points (2s/10s) -5.75 basis points
• Bloomberg Industrial Metal Index 169.4 -1.4%
• Dutch TTF Nat Gas(European benchmark) 85.4 euros/megawatt-hour +3.5%
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 14.1% -.1 percentage point
• US Atlanta Fed GDPNow Q4 Forecast +3.5% unch.
• US 10-Year T-Note Yield 4.99% +10.0 basis points
• 1-Year TIPS Spread 2.0 +12.0 basis points

• Highest target rate probability for Jan. 27th FOMC meeting: 59.7% (+40.4 percentage points) chance of 4.25%-4.5%. Highest target rate probability for March 17th meeting: 43.4%(+2.1 percentage points) chance of 4.25%-4.5%. (current target rate is 3.75-4.0%)
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -380 open in Japan 
• China A50 Futures: Indicating -45 open in China
• KOSPI 200 Futures: Indicating -16 open in South Korea 

• DAX Futures: Indicating +240 open in Germany

Portfolio:

• Slightly Lower: On losses in my tech/biotech/consumer discretionary sector longs
• Disclosed Trades: Added to my (IWM)/(QQQ) hedges
• Market Exposure: Moved to 75% Net Long