Friday Watch

Evening Headlines

Bloomberg:       

• Xi Reshapes China Property Market Paving Way for State Dominance.  
• Asia Stocks Decline as Fed Hawks Spur Nasdaq Rout: Markets Wrap.  
• Oil Heads for Fourth Weekly Advance as Traders Shrug Off Omicron.  
• Trucking, Farming, Heating Will Get More Costly as Diesel Surges.
• ‘We’re Overwhelmed:’ Nurses Strike Across the U.S. to Protest Covid Working Conditions.
  
• U.S. Truckers Near Deadline to Get Shots or Be Barred by Canada.
• Biden Suffers Political Setback With Scant Hope for Voting Bills.
• America’s Political Future (Still) Hinges on Georgia.
• Omicron Wave May Have Peaked in Boston, Sewage Data Show.  
• Teen Cyber Prodigy Stumbled Onto Flaw Letting Him Hijack Teslas.
• Henry Kaufman, 1970s Wall Street Dr. Doom, Blasts Powell on Inflation.  
• IRS Targets Your Side Hustle in Crackdown on Transactions Over $600.  
• Treasury Market Stages Reprieve Rally as Yield Surge Lures Cash.  
• Fed’s Waller Says Three 2022 Rate Hikes ‘Still a Good Baseline’.  
• Top Democrat Targets Scaramucci’s SkyBridge, Others in Opportunity-Zone Probe.

Wall Street Journal:

• One of the World’s Dirtiest Oil Patches Is Pumping More Than Ever.
• Student-Loan Processor Navient to Cancel $1.7 Billion of Debts.
• Fed’s Brainard Says Reducing Inflation Is Top Priority.
  
• A Split Supreme Court Decision on Vaccine Mandates. At least the Justices struck down OSHA’s overreach on private employers.
• Biden’s Operation Snail Speed on Covid Therapies. Less than 1% of $1.9 trillion in last March’s relief cash went for treatments. 
• These TikTok Stars Made More Money Than Many of America’s Top CEOs.
• Truckers Fret Over Pending Covid-19 Rules at U.S.-Canada Border.

Fox News:

• Alleged cold-blooded killer's warpath moments before deadly rampage  
• Biden's failure to anticipate Taliban Afghanistan takeover, omicron spread shows 'inability to lead': GOP.
• Steve Forbes torches Biden's remarks on economy, jobs: They're 'standing in the way' of recovery.

CNBC.com:

• Supreme Court blocks Biden Covid vaccine mandate for businesses, allows health-care worker rule.
• Fed’s Harker calls for ‘action on inflation,’ sees 3 or 4 rate hikes likely this year.
• What Delta Air Lines predicts for business travel after the omicron variant.
• Ford’s market cap tops $100 billion for first time.
• Profits for S&P 500 companies rose 22% in the fourth quarter and nearly 50% in 2021, estimates show.
• Queen Elizabeth strips Prince Andrew’s remaining royal affiliations as he fights Epstein accuser suit.
• Mastercard CEO says spending trends look ‘relatively positive’ so far in 2022 after strong holiday.

MarketWatch:    

• ‘There’s no way the stock market goes up this year, it probably goes down pretty aggressively,’ says hedge-fund honcho Kyle Bass.
  
• Bad news for home buyers: Mortgage rates soar to highest level since March 2020.

Zero Hedge:

• Supreme Court Blocks Biden's OSHA Vaxx Mandate.
• Global Economy Heading For "Mother Of All" Supply Chain Shocks As China Locks Down Ports.
• Helicopter Operations May Be Affected By Nationwide 5G Rollout.
• Texas, Florida Residents Can Pat Themselves On The Back.
• World's Largest Asset Manager: Central Banks Are Trapped As They Can't Fight Supply-Driven Inflation.
• Some Good News: Rents Have Finally Peaked As Rental Market Enters "Widespread Cooldown".
• China Sends A Message With Weakest Yuan Fixing Relative To Expectations In Over A Month.
• US Hits N.Korea With More Sanctions As Kim Hails Tests Of Hypersonic Nuclear "War Deterrent".
• Revenue At Goldman's Commodity Desk Soars To Highest In A Decade, Setting Up Partners For Massive Bonuses.
• In His Last Comment As Fed Vice Chair, Clarida Echoes Brainard, Says Rate Hikes Coming.
• Bipartisan Lawmakers Float Stock Trading Bans For Members Of Congress.
• Nationwide Surge In Deaths Among People Aged 18-49: A State By State Overview.
• Capitalism And Common Sense Will End Vaccine Mandates In 2022.
• Bitcoin, Breakevens, & Big-Tech Breakdown As Inflation Batters Bond Bears.

Newsmax: 

• Rep. Norman: Biden's Inflation Makes Jimmy Carter 'Look Like a Hero'.

TheGatewayPundit.com:  

• Roberts and Kavanaugh Side with Lefties, Allow Healthcare Worker Vax Mandate to Stand.
• Jan. 6 Committee Subpoenas Twitter, Reddit, Google and Facebook to See ‘How the Spread of Misinformation Contributed to Capitol Attack’.
• Psaki Refuses to Condemn Video from Iran’s Supreme Leader That Depicts the Assassination of President Trump (VIDEO).
• Tragic: 38-Year-Old Athlete Dies after Suffering Heart Attack During Swim Portion at Ironman 70.3 Pucon (VIDEO).
• Joe Biden Vows to Go to War with State Legislatures After Sinema and Manchin Blow Up His Bid to Kill the Filibuster (VIDEO).
• Sinema Deals Fatal Blow to Democrats’ ‘Voting Rights’ Bill Two Days After Biden Calls on Senate to Nuke Filibuster (VIDEO).
• BREAKING: OathKeepers Founder and President Stewart Rhodes Arrested — Charged with Seditious Conspiracy a Year Following Jan. 6 Protests.
• “It Has to Stop” – Joe Biden Tells Social Media Companies to “Deal with” Covid “Misinformation and Disinformation” (VIDEO).
• BOOM! Only 31% of Americans Trust Megalomaniac Dr. Fauci After His Many Proven Lies on COVID Origins and Effective Treatments.
• After Firing Unvaxxed Healthcare Workers, California Tells Covid-Positive Medical Workers to Stay on the Job.
• Investigation Launched After 13-Year-Old Brazilian Girl Dies – Mother Blames Pfizer Vaccine.

The Epoch Times:

• China Underreporting COVID-19 Death Rate by 17,000 Percent, Economist Says.

Twitter: 

• @Krommsan - In case anyone missed their beloved #PfizerCEO say the quiet parts out loud… Pfizer CEO: “Two doses of the vaccine offers very limited protection, if any. 3 doses with a booster offer reasonable protection against hospitalization and deaths. Less protection against infection.” (video)
• @The_Real_Fly - THIS IS AMERICA. (video)
  

OpenVAERS:

• VAERS US COVID Vaccine Adverse Event Reports. 715,856 Reports(+6,773 from prior week) Through December 31, 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 equity indices are -1.25% to -.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 83.25 +3.25 basis points. 

• China Sovereign CDS 45.5 +2.5 basis points.
  

• Bloomberg Emerging Markets Currency Index 54.24 -.02%. 
• Bloomberg Global Risk-On/Risk Off Index 3,250.0 -150.0 points.
• Volatility Index(VIX) futures 22.2 +.48%.
• Euro Stoxx 50 futures -.92%.

• S&P 500 futures -.04%.

• NASDAQ 100 futures -.08%. 

Morning Preview Links

Earnings of Note 
Company/Estimate 

 

Before the Open: 

• (BLK)/10.11
• (C)/1.66
• (FRC)/1.94
• (JPM)/3.05
• (WFC)/1.00
  

After the Close:

• None of note
  

Economic Releases

8:30 am EST

• Retail Sales Advance MoM for Dec. is estimated to fall -.1% versus a +.3% gain in Nov.
• Retail Sales Ex Autos MoM for Dec. is estimated to rise +.2% versus a +.3% gain in Nov.
• Retail Sales Ex Autos and Gas for Dec. is estimated to fall -.2% versus a +.2% gain in Nov.
• The Import Price Index MoM for Dec. is estimated to rise +.2% versus a +.7% gain in Nov.
• The Import Price Index ex Petrol MoM for Dec. is estimated to rise +.6% versus a +.7% gain in Nov.
• The Export Price Index MoM for Dec. is estimated to rise +.3% versus a +1.0% gain in Nov.
  

9:15 am EST

• Industrial Production MoM for Dec. is estimated to rise +.2% versus a +.5% gain in Nov.
• Capacity Utilization for Dec. is estimated to rise to 77.0% versus 76.8% in Nov.
• Manufacturing Production for Dec. is estimated to rise +.3% versus a +.7% gain in Nov.

10:00 am EST

• Univ. of Mich. Consumer Confidence for Jan. is estimated to fall to 70.0 versus 70.6 in Dec.
• Univ. of Mich. 1Y Inflation Expectations is estimated at +4.8% versus +4.8% in Dec.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Williams speaking, Bloomberg US Economic Survey for Jan. and the Eurozone CPI report could also impact global trading today.

US Equity Market Hours

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are lower, weighed down by technology and consumer shares in the region. I expect US stocks to open modestly lower and to maintain losses into the afternoon. The Portfolio is 25% net long heading into the day.

Stocks Falling into Final Hour on US Policy-Induced Labor/Product Shortage Fears, Escalating Russia/Ukraine Tensions, Fed Rate-Hike Concerns, Tech/Biotech Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line:  Lower
  

• Sector Performance:  Mixed
  

• Volume:  Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 18.6 +5.1%
• Bloomberg Global Risk On/Risk Off Index 3,547.0 -90.0 points

• Euro/Yen Carry Return Index 134.80 -.24%

• Emerging Markets Currency Volatility(VXY) 9.90 -.4%

• CBOE S&P 500 Implied Correlation Index 30.7 +5.0% 

• ISE Sentiment Index 106.0  -25.0 points
  

• Total Put/Call .85 +2.4%

• NYSE Arms .94 +6.8%

Credit Investor Angst:

• North American Investment Grade CDS Index 52.59 +2.5%
  

• US Energy High-Yield OAS 374.91 +.6%

• European Financial Sector CDS Index 58.9 +1.7%

• Italian/German 10Y Yld Spread 131.0 -1.0 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 82.0 +2.6%
  

• Emerging Market CDS Index 204.33 +2.8%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 32.07 -.18%

• 2-Year Swap Spread 20.0 +1.25 basis points
  

• TED Spread 13.25 +.25 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap 2.0 unch.
  
• MBS  5/10 Treasury Spread  82.5 +4.25 basis points
  
• IHS Markit CMBX BBB- 6 72.25 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 54.29 -.60%
• 3-Month T-Bill Yield .11% unch.
  

• Yield Curve 83.0 -1.25 basis points
  

• China Iron Ore Spot 129.90 USD/Metric Tonne +1.4%

• Citi US Economic Surprise Index 10.10 -1.5 points

• Citi Eurozone Economic Surprise Index 36.3 +2.2 points
  

• Citi Emerging Markets Economic Surprise Index +4.9 +5.2 points

• 10-Year TIPS Spread 2.47 -5.0 basis points
  
• 24.3%(-5.9 percentage points) chance of no change at March 16th FOMC meeting, 8.9%(-3.4 percentage points) chance of no change at May 4th meeting

US Covid-19:

• 1,642 new infections/100K people(last 7 days total). At new peak +50/100K people from prior report.
  
• New Covid-19 patient hospital admissions per 100K population at new record high +24.5%(-4.1 percentage point from prior report) from prior 7-day avg. of 12/29/21 - 1/4/22
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -84 open in Japan 
• China A50 Futures: Indicating -22 open in China

• DAX Futures: Indicating -94 open in Germany

Portfolio:

• Slightly Higher: On gains in my transport/industrial sector longs, emerging market shorts and index hedges
  

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

• Market Exposure:  Moved to 50% Net Long
  

Afternoon Market Internals

NYSE Composite Index:

• Volume Running +7.1% Above 100-Day Average 
• 6 Sectors Rising, 5 Sectors Declining
• 51.9% of Issues Advancing, 44.4% Declining
• 98 New 52-Week Highs, 62 New Lows
• 54.0% of Issues Above 200-day Moving Average
• Average 14-Day RSI 49.8% 
• Bloomberg Global Risk-On/Risk-Off Index 3,507.0 -131.0 points
• Russell 1000: Growth/Value 17,019 -1.62%
  
• Vix 18.8 +6.9%
• Total Put/Call .84 +1.2%
• TRIN/Arms 1.05 +19.3%

Thursday Watch

Night Trading 

• Asian equity indices are +.25% to +.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 80.0 +.5 basis point. 

• China Sovereign CDS 43.0 +.5 basis point.
  

• Bloomberg Emerging Markets Currency Index 54.65 +.06%. 
• Bloomberg Global Risk-On/Risk Off Index 3,634.0 -4.0 points.
• Volatility Index(VIX) futures 21.1 +.61%.
• Euro Stoxx 50 futures -.06%.

• S&P 500 futures -.12%.

• NASDAQ 100 futures -.12%. 

Morning Preview Links

Earnings of Note 
Company/Estimate 

 

Before the Open: 

• (DAL)/.14
• (TSM)/6.22
  

After the Close:

• (WAFD)/.70
  

Economic Releases

8:30 am EST

• PPI Final Demand MoM for Dec. is estimated to rise +.4% versus a +.8% gain in Nov.
• PPI Ex Food and Energy MoM for Dec. is estimated to rise +.5% versus a +.7% gain in Nov.
• Initial Jobless Claims for last week are estimated to fall to 200K versus 207K the prior week.
• Continuing Claims are estimated to fall to 1733K versus 1754K the prior week.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The China Trade Data report, weekly EIA natural gas inventory report, 30Y T-Bond auction, (MNST) investor day and the (BIIB) analyst call could also impact global trading today.

US Equity Market Hours

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are mostly higher, boosted by industrial and consumer shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the day.

Stocks Slightly Higher into Final Hour on Stable Long-Term Rates, Oil Gain, Dollar Weakness, Commodity/Shipping Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line:  Modestly Lower
  

• Sector Performance:  Mixed
  

• Volume:  Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 18.0 -2.3%
• Bloomberg Global Risk On/Risk Off Index 3,620.0 +12.0 points

• Euro/Yen Carry Return Index 135.01 -.03%

• Emerging Markets Currency Volatility(VXY) 9.93 -1.6%

• CBOE S&P 500 Implied Correlation Index 29.9 +2.3% 

• ISE Sentiment Index 104.0  -38.0 points
  

• Total Put/Call .82 +10.8%

• NYSE Arms .99 +39.4%

Credit Investor Angst:

• North American Investment Grade CDS Index 51.35 -.82%
  

• US Energy High-Yield OAS 376.15 -2.1%

• European Financial Sector CDS Index 57.90 -1.4%

• Italian/German 10Y Yld Spread 132.0 -1.0 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 79.91 -.05%
  

• Emerging Market CDS Index 198.58 +.46%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 32.13 -.59%

• 2-Year Swap Spread 18.75 -2.0 basis points
  

• TED Spread 13.0 +.25 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap 2.0 unch.
  
• MBS  5/10 Treasury Spread  78.25 +.5 basis point
  
• IHS Markit CMBX BBB- 6 72.25 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 54.65 +1.27%
• 3-Month T-Bill Yield .11% unch.
  

• Yield Curve 84.25 -1.25 basis point
  

• China Iron Ore Spot 132.0 USD/Metric Tonne +.63%

• Citi US Economic Surprise Index 11.60 +5.6 points

• Citi Eurozone Economic Surprise Index 34.1 -5.1 points
  

• Citi Emerging Markets Economic Surprise Index -.3 -3.4 points

• 10-Year TIPS Spread 2.52 -5.0 basis points
  
• 21.2%(unch.) chance of no change at March 16th FOMC meeting, 12.3%(-.2 percentage point) chance of no change at May 4th meeting

US Covid-19:

• 1,592 new infections/100K people(last 7 days total) -24/100K people from prior report. 98%(-2.0 percentage points) of Jan. 9 peak.
  
• New Covid-19 patient hospital admissions per 100K population at new record high +28.6%(-3.9 percentage points from prior report) from prior 7-day avg. of 12/28/21 - 1/3/22
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -80 open in Japan 
• China A50 Futures: Indicating +116 open in China

• DAX Futures: Indicating -19 open in Germany

Portfolio:

• Slightly Higher: On gains in my transport/industrial/tech sector longs and index hedges
  

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

• Market Exposure:  Moved to 75% Net Long
  

Afternoon Market Internals

NYSE Composite Index:

• Volume Running +2.4% Above 100-Day Average 
• 7 Sectors Rising, 4 Sectors Declining
• 49.6% of Issues Advancing, 46.6% Declining
• 91 New 52-Week Highs, 48 New Lows
• 51.5% of Issues Above 200-day Moving Average
• Average 14-Day RSI 48.0% 
• Bloomberg Global Risk-On/Risk-Off Index 3,610.0 +6.0 points
• Russell 1000: Growth/Value 17,332 +.45%
  
• Vix 18.2 -1.3%
• Total Put/Call .80 +8.1%
• TRIN/Arms .91 +28.2%