Stocks Lower into Final Hour on US Policy-Induced Stagflation Fears, Global Virus Lockdown/Mandate Worries, Meme Stock/Crypto Bubbles Bursting, Energy/Consumer Discretionary Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line:  Substantially Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Around Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 20.3 +8.5%
• Bloomberg Global Risk On/Risk Off Index 2,573.0 -170.0 points

• Euro/Yen Carry Return Index 132.0 -.19%

• Emerging Markets Currency Volatility(VXY) 10.8 +.4%

• CBOE S&P 500 Implied Correlation Index 30.9 +7.7% 

• ISE Sentiment Index 103.0  -8.0 points
  

• Total Put/Call .93 -13.9%

• NYSE Arms 1.40 +82.9%

Credit Investor Angst:

• North American Investment Grade CDS Index 53.44 -.31%
  

• US Energy High-Yield OAS 414.23 +.21%

• European Financial Sector CDS Index 59.97 -.69%

• Italian/German 10Y Yld Spread 129.0 -2.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 83.45 -1.37%
  

• Emerging Market CDS Index 191.89 +.29%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 33.20 -.34%

• 2-Year Swap Spread 19.5 -1.25 basis points
  

• TED Spread 15.0 +.25 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -14.75 -.75 basis point
  
• MBS  5/10 Treasury Spread  71.75 +.25 basis point
  
• IHS Markit CMBX BBB- 6 72.25 -.25 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 53.43 -.16%
• 3-Month T-Bill Yield .05% unch.
  

• Yield Curve 82.25 +2.75 basis points
  

• China Iron Ore Spot 114.7 USD/Metric Tonne +2.7%

• Citi US Economic Surprise Index 32.5 -2.5 points

• Citi Eurozone Economic Surprise Index 8.6 +1.6 points
  

• Citi Emerging Markets Economic Surprise Index -10.4 +2.7 points

• 10-Year TIPS Spread 2.44 -4.0 basis points
• 89.8%(-2.1 percentage points) chance of no change at Jan. 26th meeting, 65.4%(+2.0 percentage points) chance of no change at March 16th meeting

US Covid-19:

• 258 new infections/100K people(last 7 days total) +7/100K people
• 49% of Jan. 7th, 2021 peak(highest daily avg. new infections) +2.0 percentage points
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -60 open in Japan 
• China A50 Futures: Indicating -52 open in China

• DAX Futures: Indicating +15 open in Germany

Portfolio:

• Lower: On losses in my tech/consumer discretionary/industrial/transport sector longs
  

• Disclosed Trades:  Added to my (IWM)/(QQQ) hedges
  

• Market Exposure:  Moved to 75% Net Long
  

Afternoon Market Internals

NYSE Composite Index:

• Volume Running +5.7% Above 100-Day Average 
• 4 Sectors Rising, 7 Sectors Declining
• 27.3% of Issues Advancing, 68.4% Declining
• 52 New 52-Week Highs, 103 New Lows
• 49.4% of Issues Above 200-day Moving Average
• Average 14-Day RSI 46.0% 
• Bloomberg Global Risk-On/Risk-Off Index 2,523.0 -220.0 points
• Russell 1000: Growth/Value 18,505 -.18%
  
• Vix 20.7 +10.5%
• Total Put/Call .91 -15.7%
• TRIN/Arms 1.43 +88.2%

Monday Watch

Today's Headlines

Bloomberg:                 

• G-7 Warns Russia of ‘Massive Consequences’ Over Ukraine. 
• China Seen Adding Fiscal Stimulus Soon After Setting Priorities.  
• Housing Presales Under Threat; Hui Cuts Stake: Evergrande Update.  
• Private Equity Firms Plan Cuts in China to Escape Property Woes.  
• Slip in Japan Manufacturing Outlook Underplays Omicron Concern.  
• Boris Johnson Faces Battles on All Fronts as Controversies Mount.
  
• U.K. Housing Loses Momentum With Second Drop in Asking Prices.
• Blinken Says Russia-Germany Pipeline Offers Leverage Over Putin.  
• Iran Bases Next Year’s Budget on $60-a-Barrel Oil, Fars Says.    
• Asian Stocks, U.S. Equity Futures Rise; Pound Dips: Markets Wrap.
• Saudi Stocks Eke Out Small Gain After STC Pares Loss: Inside EM.   
• China Growth, Diverging Central Banks, Inflation Fears: Eco Day.
• Southwest Airlines Skeptics Are ‘Missing the Point,’ CEO Says.
  
• SEC Probes One Thousand & One Voices Over Spending, WSJ Says.
  
• Apple Set to Release Nudity Detection in Texting, But Other Features Remain on Hold.  
• El-Erian Says Transitory Inflation Call Likely Fed’s Worst Ever.
• Dip Buyers Scoring Historic Win in Stocks That Defy Bond Warning.   
• Ackman Says SALT Tax Deduction Increase ‘Makes No Sense’.

Wall Street Journal:

• Buybacks Hit Record After 2020 Pullback.
• ETF Inflows Top $1 Trillion for First Time.
• SEC Investigates Private-Equity Firm Backed by Wealthy Families.
• Rescuers Sift Through Rubble for Tornado Survivors in Kentucky, Illinois.
• No Rules for Progressive Radicals. Biden appointees try to stage a coup against the director of the FDIC on bank mergers.
• Inflation Surge Pushes U.S. Real Interest Rates Deeper Into Negative Territory.
• Sirius Hires Top Builder of Disney+ Streaming Service.
• Yellen Walks Tightrope to Deliver on Biden’s Climate Promises.
• Unpaid Bills Pile Up for Former Hedge-Fund Star.
• The Real Cost of Biden’s Spending Plan. CBO comes clean on the price tag if the programs are made permanent.
• Trucker Central Freight Lines to Close After Years of Losses.

Fox News:    

• Biden's approval rating plummets on handling of crime surge, inflation.
• New poll reveals what a potential Trump-Biden 2024 showdown might look like.

CNBC:

• G-7 warns Russia of ‘massive consequences’ if it attacks Ukraine.
• Amazon’s outage and HashiCorp’s IPO point to a future with multiple clouds.
• What Apple, Google smartwatches are beginning to display about our health.

Zero Hedge:

• "This Is The Single Biggest Thing You Need To Have On Your Rader" - Why Goldman Goes All-In On A Face-Ripping Santa Rally.
• Panic? US Mega-Corporations Rush To Abandon Vax Mandate.
• Hospitalizations, Mortality Cut In Half After Brazilian City Offered Ivermectin To Everyone Pre-Vaccine.
• Titleist Bans "Let's Go Brandon" Personalization Of Its Golf Balls.
• China Creates "Humanized Pigs" To Be Used In COVID Research. 
• Morgan Stanley: As Uncomfortable As It Can Be To Admit Defeat, Here We Are.
• DHL Is Keeping Pace With The Holiday Rush By Adding 1,500 New Robots.
• "We Expect A Sea Change": Morgan Stanley Admits It Was Wrong, Now Sees Liftoff In 2022 As Goldman Goes All-In With 7 Rate Hikes.
• Dems Panic Over 'Build Back Better' Impasse As Child Tax Credit Set To Expire.
• Quake Swarms In Japan Raise Fears "The Next Big One Will Happen This Month".
• On Inflation: Friday's 7% Increase In Consumer Prices Is 11% When House Prices Are Added.
• Biden's New "Regressive" Methane Tax Will Raise Average American's Gas Bill By 17%: Op-Ed.
• From Panic-Selling To Panic-Buying In One Week.
• Four States Calling In National Guard To Alleviate Healthcare Staffing Crisis.
• World Leaders Have To Face The Truth About Oil Demand.
• German Schoolchildren Subjected To 'Ritual Humiliation' Over Their Vaccine Status.
• Hackers Blamed For Cream Cheese Shortage Currently Afflicting The US.
• EA Games Tells Kyle Rittenhouse His Name Could "Harm" Other Gamers.
• "When Science Mixes With Politics, All We Get Is Politics...".
• Top Japan Officials To Join US Boycott Of Beijing Olympics As List Grows.

NewsMax:

• 'Good Riddance' Trends on Twitter Chris Wallace Leaves Fox News for CNN.
• CNN Staffer Tied to Chris Cuomo Indicted for Grooming Minors for Sex.

TheGatewayPundit.com:

• BREAKING: Never-Trumper Chris Wallace Announces He Is Leaving FOX News.
• THEY’RE SCARED: Fulton County Commissioner Robb Pitts Tells Auditors: ‘Stay the Hell Out of Fulton County”. 
• German Police Enforce Covid Social Distancing Measures with Rulers (VIDEO).
• EVIL: SNL ‘Jokes’ About Gang F***ing Roger Stone’s 75-Year-Old Wife Who Has Cancer (VIDEO). 
• THE BIG LIE: The ‘Powers That Be’ Overcount COVID Deaths and Undercount Vaccine Deaths – All for Money and Power.
• SNL “Hip-Hop Nativity” Skit Shows “Baby Jesus” Twerking – Mary as a Stripper and “Baby Daddy” Joseph with a “Pimp Walk” (VIDEO).
• Female Penn Swimmers Step Forward, Describe Teammates in Tears Over Transgender Lia Thomas as UPenn Admin Advises Swimmers to Shut Up and Avoid Talking to Media.
• With 1.7 Million Illegal Border Crossings This Past Fiscal Year – Where Did These People Go and Who Paid For It?
• HUGE: Pennsylvania Democrats Scared of Ongoing 2020 Election Audit in State – Crooked AG Is Freaking Out.
• Jen Psaki and Biden Admin Defend Forcing Kindergarteners to Sit Outside in 40 Degree Weather Alone on Buckets to Eat Lunch.
• Tucker Carlson Explains Why Inflation Is Even Worse Than You Think (VIDEO).

The Epoch Times:

• American Jailed for 3 Years in China for Buying Toy Guns Online.

Daily Mail:

• South Africa's Omicron outbreak slows as expert says population's T-cell immunity against Covid has kept hospitalisations low and praises government for not locking down.

Twitter:

• What’s amazing about Australia is that despite ~90% of everyone over 16 being vaccinated, mask mandates, vaccine passports and forced quarantines, cases are actually rising again. (graph)
  

OpenVAERS:

• VAERS COVID Vaccine Adverse Event Reports. 681,961 (US) Reports Through December 3, 2021.

SKirsch.com:

• Using the MGH numbers with our own VAERS queries, we have 247 cases per million doses from the MGH study divided by 5.97 cases per million doses from VAERS. 247/5.97 = 41. This suggests that the VAERS under-reporting factor (URF) is 41X.

Covid-19(Data, Maps, Graphs):

• Our World in Data:  New Global Covid-19 Cases(7-day rolling average graphs). New US Covid Hospital Admissions/ICU Admissions/Deaths
  
• FT.com:  Fully Vaccinated by Country(graph). Global Lockdown Stringency Index(map).
• Bloomberg.com:  International Travel Restrictions.  Case Graphs by State.
  
• NYTimes.com:  County Trends and Clusters. Local ICU Occupancy.
  
• Brown School of Public Health:  Covid Severity by State/County(map).  US Hospital Capacity(region).
  
• CovidActNow:  Covid Severity/Infection Rate by Metro Area.
  
• KFF:  US Vaccinations by Race/Ethnicity.
  
• Carnegie Mellon: Covid-Like Symptoms in Community. Covid Symptom Searches on Google. Covid-Related Dr.Visits.  Restaurant Visits. Wearing Masks. (graphs)
  
• Safegraph.com:  Commerce Patterns(graphs).

Night Trading

• Asian indices are +.25% to +.75% on average.
• Asia Ex-Japan Investment Grade CDS Index 84.75 -2.75 basis points.
• China Sovereign CDS 43.5 -2.0 basis points.
• Bloomberg Emerging Markets Currency Index 53.53 +.03%.
• Bloomberg Global Risk-On/Risk Off Index 2,830.0 +87.0 points.
• Volatility Index(VIX) futures 22.0 -1.4%. 
• Euro Stoxx 50 futures +.56%.
• S&P 500 futures +.40%.
• NASDAQ 100 futures +.39%.

Morning Preview Links

Earnings of Note

Company/Estimate

Before the Open:

• None of note
  

After the Close:

• None of note
  

Economic Releases

• None of note

Upcoming Splits

• (PLUS) 2-for-1
  

Other Potential Market Movers

• The Japan Industrial Production report, (MTW) analyst meeting and the (REGN) investor event could also impact trading today.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

BOTTOM LINE: Asian indices are higher, boosted by industrial and technology shares in the region. I expect US stocks to open modestly higher and to maintain gains into the afternoon.  The Portfolio is 100% net long heading into the week.

Today's Headlines

Bloomberg:            

• Xi’s New China Has Investors Moving From Luxury to Low-End Goods.
• Biden Warns Russia of Harsh Economic Penalty If Ukraine Attacked .
  
• Indian Prime Minister Modi’s Twitter Account Hacked.
• Pfizer Course Has 23% Efficacy Vs. Omicron in S. African Study.  
• Oil Posts Strongest Week Since August as Virus Fears Abate.
  
• Fed Hikes Seen Starting With Yield Curve Flattest in Generation.  
• Tornadoes Lash Central U.S., Up to 100 Feared Dead in Kentucky.
• U.S. Corporate Bond Primary Markets Finally Enter Holiday Lull.  
• Omicron Forces Central Bankers to Look Back at Crisis: Eco Week.  
• Price Shock at Meat Counter Worsens U.S. Inflation Jitters.  
• Massive U.S. Debts Could ‘Trap’ Powell as Fed Fights Inflation.  
• Charting the Global Economy: U.S. Inflation at Near 40-Year High.

Wall Street Journal:

• Banks Face Pressure on Lucrative Overdraft Fees.
• Inflation Hits Workers Already Worn Down by Covid-19.
• The Challenging Road Ahead for Rivian’s Billionaire CEO.
• The Best-Managed Companies of 2021—and How They Made It to the Top.
• GM Plans $3 Billion for Electric-Vehicle Projects in Michigan.
• No Rules for Progressive Radicals. Biden appointees try to stage a coup against the director of the FDIC on bank mergers.
• Joe Manchin’s Inflation Vindication. Prices rise 6.8% in a year, ample reason to shelve the Biden tax and spending blowout.
• Is MIT’s Research Helping the Chinese Military?
• 2021’s Best-Managed Companies—and How They Made It to the Top.
• Dueling Accounts Emerge Over ‘Rust’ Set Fatal Shooting.

NY Post:

• Ghislaine Maxwell trial: Live updates from Day 10.
  

IG:

• Weekend Markets Trading Live.

Barron's:

• Had bullish commentary on (XOM), (OPEN), (CVX) and (PBCT).

CNBC:

• Why BuzzFeed’s poor debut doesn’t necessarily spell bad news for new media.
• Instacart president Carolyn Everson announces departure just three months after she started.
  

MarketWatch.com:          

• Americans pay the price for high inflation each time they go to the grocery store.
• Highest U.S. inflation in nearly 40 years will force Federal Reserve’s hand.
• Biden redoubles Build Back Better push as Republicans say inflation rate demonstrates Democrats’ ‘incompetence’.

Fox News:

• Watch Biden push his own agenda during deadly twister speech to Americans who are hurting.
• WATCH: Kentucky gov asks for prayers, gives update on 'indescribable' tornado devastation.
• LIVE UPDATES: Deadly tornado outbreak carves catastrophic path of destruction in nation’s heartland. 
• Producer for CNN's former anchor and only star arrested for sick sex claims.

Newsmax:     

• CBO Report: 'Build Back Better' Could Cost $3T Over Next Decade.
• Rep. Gooden: McConnell Conceded to Democrats, Raised Debt Ceiling.

Zero Hedge:

• COVID-19 A Pandemic Of Fear "Manufactured" By Authorities: Yale Epidemiologist. 
• WHO/CDC: Zero Omicron Deaths In The World, Only 1 Hospitalized Across 22 States In US.
• CNN Producer Arrested, Accused Of Raping Children As Young As 9.
• EU Sees Signs That 4th COVID Wave Is Already Slowing. 
• "We Expect A Sea Change": Morgan Stanley Admits It Was Wrong, Now Sees Liftoff In 2022 As Goldman Goes All-In With 7 Rate Hikes.
• California Is Hiding $300 Billion A Year In Spending From The Public, Claims It's For The People's Own Good.
• US Shale Slams Biden's Oil Policies.
• Stung By The Semi Shortage, Chinese Auto Sales Fall For The Seventh Straight Month.
• Kellogg Plans To Permanently Replace 1,400 Striking Workers.
• Inflation Surges Near 40-Year High, Wages Aren't Keeping Up.
• Have Professional Athletes Become The Canary-In-The-COVID-Coalmine?
• Ponzi? Insiders Dump Stocks To Their Own Companies At Record Pace.
• Kentucky Wakes Up To Devastation After "Mass Casualty" Storm Rips Through State.
• Fear & Inflation: The Timeless Policy Tools Of Discredited Systems.
• Unvaxxed In Austria Could Be Imprisoned For A Year.
• These Are The Youngest (& Oldest) Richest Women In America.
• A Dozen Major US Cities Hit All-Time Murder Records With 3 Weeks Still Left In 2021.
• US Blocks Investment In Uyghur-Hunting Facial-Recognition AI Startup.
• World Economy Entering Period Of Oil Scarcity, Halliburton CEO Says.
• And Just Like That, Inflation Is About To Disappear?
• Black Lives Matter Calls For Xmas Boycott Of "White Companies".
• Manhattan Rents Jump Most On Record Despite Dismal Back-To-Office Return.
• New York Will Require Masks At All Indoor Businesses That Don't Have Vaccine Requirement.
• UN Chief Accepts Invitation To Beijing Winter Olympics Despite Diplomatic Boycotts.
• BofA: "The Bubble In Speculative Froth Has Popped Resulting In Epic Divergences".
• Politicians, Celebs Who Shouted 'Racism' From Rafters Silent After Smollett Verdict.
• US Sets 1-Week Deadline To See If Iran Talks Advance As Israel Pushes Military Option: Report.
• HOD+ATH.
• Biden's Full Plate: Ukraine, Taiwan, Tehran.
• Omi-Gone? Stocks Soar As Scariant & CPI Send Bonds, Bitcoin, & The Buck Lower On The Week.

TheGatewayPundit.com:

• Former Georgia Senator and Governor Candidate David Perdue Says He Wouldn’t Have Certified Georgia’s 2020 Election Results. 
• ‘No to Vaccine Fascism’ – Tens of Thousands of Protesters March in Vienna to Stop Lockdowns and Covid Vaccine Mandates (VIDEO). 
• Solyndra 2.0? Biden Megadonor Gets $500 Million Loan to Build Solar Company in India.
• (VIDEO) Doctor Warns Stillbirths Are Rampant Among Fully Vaccinated Mothers, Launches Investigation.
• Mark Meadows Case Against the Jan 6 Committee May End Up Shutting Down Pelosi’s Kangaroo Court.
• (VIDEO) Canadian COVID Hotel Detainee Fights With Healthcare Workers For Release After Days Of Forced Quarantine.
• JUST IN: Pentagon Actively Discussing Requiring Covid Booster Shots For all Troops (VIDEO).
• Donald Trump Jr.: Joe Biden Skipped Army-Navy Game to Avoid “Let’s Go Brandon!” Chants.
• Another One… Manchester United Player Stops Play, Leaves Game Early with Reported Chest Pains.
• BREAKING EXCLUSIVE: Documents Obtained by Judicial Watch Show Peter Daszak, EcoHealth and US Institutions Worked with China’s Military in Researching Coronaviruses. 
• Ritual Humiliation of Children in Germany: Kids are Forced to go to Front of the Class and State Their Vaccination Status – the Vaccinated are Applauded.
• Psaki Claims the Only Americans Who Look at Economic Data “Work in New York and Other Places” (VIDEO).
• “They Counted Batches of Ballots Multiple Times … with No Poll Watchers Present – All of which Violated Georgia Law” – Liz Harrington on David Perdue’s Explosive Fulton County Lawsuit.
• China Threatens It Will Attack Any US Troops Attempting to Protect Taiwan if a War Starts with the Tiny Island Country.
• Biden Downplays His Historic Inflation Crisis, “Not Everybody is Looking For a Used Automobile” (VIDEO).
• Facebook Admits Their 3rd-Party “Fact Checks” Are “Protected Opinions” But Very Effective in Shutting Down Conservative Content on Their Platform.
• LAX-Bound Flight Makes Emergency Landing After Passenger Screaming About BLM and Being Enslaved by the White Man Assaults Flight Attendant and Air Marshal (VIDEO).
• Senate Passes Legislation to Allow Debt Ceiling Increase without Filibuster – Here Are the Republicans Who Voted with the Democrats.
• OUCH: Democrat Mayor Calls Out Own Party For Racism –“800 LB Gorilla In The Room”.
• Former High-Ranking FBI Agents Issue Warning About Garland School Board Memo.

The Epoch Times:

• US Bans American Investment in Chinese AI Company Over Human Rights Concerns.
• China the ‘Greatest Threat’ to Democracy: New US Ambassador.  
• World Must Challenge the CCP’s ‘Evil Designs,’ End Forced Organ Harvesting: Rep. Perry.

OpenVAERS:

• VAERS COVID Vaccine Adverse Event Reports. 681,961 (US) Reports Through December 3, 2021.
  

SKirsch.com:

• Using the MGH numbers with our own VAERS queries, we have 247 cases per million doses from the MGH study divided by 5.97 cases per million doses from VAERS. 247/5.97 = 41. This suggests that the VAERS under-reporting factor (URF) is 41X.

Covid-19(Data, Maps, Graphs):

• Our World in Data:  New Global Covid-19 Cases(7-day rolling average graphs). New US Covid Hospital Admissions/ICU Admissions/Deaths
  
• FT.com:  Fully Vaccinated by Country(graph). Global Lockdown Stringency Index(map).
• Bloomberg.com:  International Travel Restrictions.  Case Graphs by State.
  
• NYTimes.com:  County Trends and Clusters. Local ICU Occupancy.
  
• Brown School of Public Health:  Covid Severity by State/County(map).  US Hospital Capacity(region).
  
• CovidActNow:  Covid Severity/Infection Rate by Metro Area.
  
• KFF:  US Vaccinations by Race/Ethnicity.
  
• Carnegie Mellon: Covid-Like Symptoms in Community. Covid Symptom Searches on Google. Covid-Related Dr.Visits.  Restaurant Visits. Wearing Masks. (graphs)
  
• Safegraph.com:  Commerce Patterns(graphs).