Stocks Reversing Higher into Afternoon on US Economic Soft Landing Hopes, Less Hawkish Fed Speak, Earnings Outlook Optimism, Tech/Energy Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Mixed
  

• Volume:  Around Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 19.1 -1.9%
• DJIA Intraday % Swing 1.59%
  
• Bloomberg Global Risk On/Risk Off Index 61.0 +2.9%

• Euro/Yen Carry Return Index 145.8 -1.3%

• Emerging Markets Currency Volatility(VXY) 10.6 unch.

• CBOE S&P 500 Implied Correlation Index 33.8 -1.5% 

• ISE Sentiment Index 133.0 +29.0 points
  

• Total Put/Call .81 +6.1%

• NYSE Arms 1.32 +64.9%

Credit Investor Angst:

• North American Investment Grade CDS Index 70.3 +.4%
  

• US Energy High-Yield OAS 350.90 +1.3%
• Bloomberg TRACE # Distressed Bonds Traded 314.0 +7.0
  

• European Financial Sector CDS Index 84.2 -.1% 
• Credit Suisse Subordinated 5Y Credit Default Swap 353.70 -1.9%
  

• Italian/German 10Y Yld Spread 188.0 basis points +2.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 104.5 +2.8%
  

• Emerging Market CDS Index 224.98 -.1%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 27.69 -.57%

• 2-Year Swap Spread 27.5 basis points +1.75 basis points
  

• TED Spread 25.25 basis points +5.25 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -9.75 -.75 basis point
  
• MBS  5/10 Treasury Spread  137.0 -1.0 basis point
  
• Bloomberg US Agg CMBS Avg OAS 104.0 unch.
  
• Avg. Auto ABS OAS .70 +1.0 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 48.1 +.02%
• 3-Month T-Bill Yield 4.64% unch.
  

• China Iron Ore Spot 119.0 USD/Metric Tonne -1.6%
• Dutch TTF Nat Gas(European benchmark) 55.4 euros/megawatt-hour -4.7%

• Citi US Economic Surprise Index 23.60 +1.7 points

• Citi Eurozone Economic Surprise Index 95.6 -5.0 points
  

• Citi Emerging Markets Economic Surprise Index 5.7 +2.4 points
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 224.25 +.02:  Growth Rate +.4% unch., P/E 18.4 +.1
• S&P 500 Current Year Estimated Profit Margin 12.09% +6.0 basis points
  
• Bloomberg US Financial Conditions Index .38 -2.0 basis points
  
• Yield Curve -79.25 basis points (2s/10s) +3.25 basis points
• US Atlanta Fed 1Q GDPNow Forecast +2.09% +142.0 basis points
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +4.30% unch.: CPI YoY +6.44% unch.
  
• 10-Year TIPS Spread 2.32 +6.0 basis points
  
• Highest target rate probability for May 3rd FOMC meeting: 70.0%(+2.2 percentage points) chance of 5.0%-5.25%. Highest target rate probability for June 14th meeting: 47.4%(-5.1 percentage points) chance of 5.0%-5.25%.
  

US Covid-19:

• 84 new infections/100K people(last 7 days total). 4.8%(-0.0 percentage point) of 1/14/22 peak(1,740) -0/100K people from prior report.
  
• New Covid-19 patient hospital admissions per 100K population -83.5%(+1.4 percentage points) from peak 7-day avg. of 1/9/22 - 1/15/22
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -165 open in Japan 
• China A50 Futures: Indicating -24 open in China

• DAX Futures: Indicating +57 open in Germany

Portfolio:

• Slightly Higher:  On gains in my tech/medical/commodity sector longs and emerging market shorts
  

• Disclosed Trades:  Covered some of my (IWM)/(QQQ) hedges
  

• Market Exposure: Moved to 50% Net Long
  

Bear Radar

Style Underperformer:

• Small-Cap Growth -.1%
  

Sector Underperformers:

• 1) Telecom -1.6% 2) Alt Energy -1.1% 3) Retail -.9%

Stocks Falling on Unusual Volume: 

• EURN, CARR, POWI, HAE, LEG, PINS, RMBS, YETI, PGNY, VVV, LESL, INCY, PRDO, AXON, SQSP, SSL, GPK, PETS, AI, ARMK, GME, BLNK, AOSL and CHGG
  

Stocks With Unusual Put Option Activity:

• 1) ABR 2) LQD 3) UAA 4) VSTO 5) VFC
  

Stocks With Most Negative News Mentions:

• 1) CHGG 2) BBBY 3) AVYA 4) NIU 5) RMBS
  

Charts:

• ETFs Falling on Unusual Volume
• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Large-Cap Growth -.1%

Sector Outperformers:

• Software +2.5% 2) Oil Service +2.2% 3) Semis +2.2%

Stocks Rising on Unusual Volume:

• OSH, ARCB, SKY, OMF, SWKS, HTZ, TTWO, SYM, FISV, SPR, BRBR, ATVI, DD and CEIX
  

Stocks With Unusual Call Option Activity:

• 1) RITM 2) CHGG 3) SPR 4) WU 5) VICI

Stocks With Most Positive News Mentions:

• 1) KPRX 2) ATVI 3) HTZ 4) OSH 5) SKYW
  

Charts:

• ETFs Rising on Unusual Volume
• Stocks Rising on Unusual Volume

Tomorrow's Earnings/Economic Releases of Note; Potential Market Movers

Earnings of Note 
Company/Estimate 

Before the Open: 

• (BDC)/1.66
• (BG)/3.21
• (CDW)/2.48
• (CME)/1.88
• (COHR)/.93
• (CVS)/1.93
• (D)/1.04
• (ETN)/2.05
• (EMR)/.87
• (FOXA)/.48
• (PAG)/3.96
• (TRMB)/.61
• (UBER)/.02
• (VSH)/.80
• (YUM)/1.26
  

After the Close:

• (AFRM)/-.99
• (AB)/.57
• (AVB)/2.61
• (EFX)/1.49
• (RE)/9.54
• (FWRD)/1.94
• (GT)/.12
• (MAT)/.29
• (MGM)/-1.57
• (ORLY)/7.73
• (PTEN)/.45
• (PPC)/-.04
• (HOOH)/-.08
• (STE)/2.19
• (THC)/1.23
• (DIS)/.79
• (WYNN)/-1.16
• (XPO)/.84
  

Economic Releases

10:00 am EST

• Wholesale Trade Sales MoM for Dec. is estimated to fall -.2% versus a -.6% decline in Nov.
  

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory gain of  +2,033,000 barrels versus a +4,140,000 barrel gain the prior week. Gasoline supplies are estimated to rise by +717,330 barrels versus a +2,576,000 barrel gain the prior week. Distillate inventories are estimated to rise by +314,500 barrels versus a +2,320,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to rise by +.8% versus a -.4% decline prior.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Weller speaking, Fed's Barr speaking, Fed's Williams speaking, French Retail Sales report, 10Y T-Note auction, weekly MBA Mortgage Applications report and the Guggenheim Oncology Conference could also impact global trading tomorrow.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Morning Market Internals

NYSE Composite Index:

• Volume Running -2.3% Below 100-Day Average 
• 8 Sectors Declining, 3 Sectors Rising
• 28.0% of Issues Advancing, 68.7% Declining
• 57 New 52-Week Highs, 10 New Lows
• 60.8%(-1.6%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 53.0 -1.0
  
• Bloomberg Global Risk-On/Risk-Off Index 59.2 +1.2%
  
• Russell 1000: Growth/Value 14,897.5 +.22%
  
• Vix 19.7 +1.4%
• Total Put/Call .82 unch.
• TRIN/Arms .91 +18.2%
  

Tuesday Watch

Evening Headlines

Bloomberg:                   

• Japan’s Wages Jump by Biggest Margin in Almost 26 Years.
• UK Steps Up Planning for Digital Pound Currency Backed by BOE.
• Credit Suisse Is Delaying Compensation Day for Some of Its Bankers. 
• Yen Slides After Amamiya Said to Be Approached as BOJ Governor.  
• Ukraine Latest: US Warns China Against Helping Putin’s Military.   
• Asia Stocks Look to Open Steady as Powell in Focus: Markets Wrap.
• Oil Holds Climbs From One-Month Low on Dual Supply Outages.
• Higher Peak Rate on Table After Jobs Blowout, Fed’s Bostic Says.
• Bed Bath & Beyond Plans Share Sale in Bid to Avoid Bankruptcy.  
• Bed Bath & Beyond Has Nothing But Itself to Blame for Downfall.
• It Now Takes Roughly 13 Years to Save for a Down Payment in New York.  
• Ron DeSantis to Take Control of Disney’s District Board in New Bill.   
• A Clear Target Emerges in Tech Layoffs: Middle Managers.   
• Texas’ Largest Pension Divests From BlackRock to Comply With Law. 
• NYSE Plans to Pay in Full 60% of Claims Submitted After Glitch.

Wall Street Journal:

• Rescuers launch frantic search for survivors trapped under buildings.
• Al Gore and the End of Climate Policy. He gave us only climate pork and propaganda, but it’s OK because the science is looking up.
• Does the Democratic Party Care What Its Voters Think? Insiders fall in line behind the candidate the electorate doesn’t want.
• The U.K.’s Government-Run Healthcare Service Is in Crisis.
• The Green Subsidy War Accelerates. The EU crafts its own version of Biden’s industrial policy and corporate welfare. 
• McCarthy Targets Elimination of Deficits in Debt-Ceiling Talks.
• CVS Nearing $10.5 Billion Deal for Primary-Care Provider Oak Street Health.
• Ohio to Release Chemical Gas on Derailed Train.
• Households Burn Through Last of Pandemic Savings.
• U.S. Air Defenses Failed to Spot Earlier Chinese Balloon Intrusions, General Says.
• Ukraine Warns Russia Is Planning Major Offensive.
• AMC to Charge More for Better Movie Theater Seats.
• Child Care Hasn’t Recovered From Covid, Keeping Parents at Home.

Fox News:

• Even Hillary Clinton has doubts about VP Harris, bombshell report reveals.
• Biden sets a new grim record as Americans feel the pain of inflation.
• Economist who called 2008 housing crash has a new prediction.

CNBC.com:

• McCarthy, Scalise go to war with U.S. Chamber after group backed some Democrats.
• Crypto exchange Binance will suspend U.S. dollar transfers.
• Pinterest shares plunge as much as 12% on fourth-quarter revenue miss and weak forecast.
• Stocks making the biggest moves after hours: Pinterest, Chegg, Take-Two Interactive and more.

MarketWatch:                 

• 41% of Americans say they’re worse off financially under Biden, highest percentage for any president in 37 years.
  
• Look for stocks to drop 30% from here, says strategist David Rosenberg. And don’t even think about turning bullish until 2024.  
• Biden will propose quadrupling the tax on corporate stock buybacks in State of the Union speech  
• Stock market poised for next leg lower as profits shrink, says Morgan Stanley’s Mike Wilson.  
• Ultraprocessed foods such as soda, microwaveable food and salty snacks linked to an array of cancers.

Zero Hedge:

• Experts Want Labels For Pfizer, Moderna COVID-19 Vaccines Updated To Acknowledge Limitations.
• "Shocking Aerial Footage" - 3,000 Dead So Far In Turkey-Syria Quake, 1,000s Of Buildings Collapsed. 
• Reality Checks In: "Indestructible" Retail Traders Who Made Millions During The Pandemic Are Now Tapped Out.
• Davos Elites Cheer The Policies That Would Harm Those With The Least. 
• NYC Is So Bad That Migrants Are Fleeing To Canada.
• Columbia Journalism Review Russiagate Post-Mortem Is A Good Start.
• Neo-Nazi Couple Arrested For Alleged Plot To 'Completely Destroy' Baltimore.
• Peter Schiff: The Fed Can't Fight What It Doesn't Understand.
• Rates and the dollar matter.
• Bed Bath & Beyond Belief: 'Bankrupt' Retailer Announces Billion-Dollar Stock/Warrant Offering.
• US stocks declined as markets continued to ramp the hawkish Fed pricing - Newsquawk Asia-Pac Market Open.
• Google To Roll Out ChatGPT Rival Powered By 'Sentient' AI.
• Dollar and yield surge continues post-NFP as hawkish Fed repricing hits stocks - Newsquawk US Market Wrap.
• Surfing Icon Says She'll Boycott Professional Tour Over Transgender Competitors.
• Massive Hawkish Reversal In Rate-Hike Odds Sparks Greenback Gains, Bond Bloodbath.
• The Annual Interest Rate Payment on Government Debt Is $850 Billion And Rising Fast.
• Apple Removes Decentralized Twitter-Like App Damus From Chinese App Store

Newsmax:  

• Rep. Comer: DirecTV Might Answer to Congress.
• Donald Trump: 'Deplorable' DirecTV Took Newsmax Off the Air 'for Political Reasons'.

TheGatewayPundit.com:

• CBS Shares Creepy Tweet in Lead Up to Satanic Program at the Grammys – Responses Are What You’d Expect.
• Biden Asked Why “China Would Make Such a Brazen Act” By Flying a Spy Balloon Across US – His Response is Shocking (VIDEO).
• NYC Teachers Speak Out About Hypocrisy of Firing Teachers for Refusing the Mandate While Allowing Thousands of Unvaccinated Illegals into Schools.
• Karine Jean-Pierre Delivers Word Salad When Asked if This is the First China Spy Balloon That US Identified Flying Over US Airspace Under Biden.
• China Spy Balloon Biden Allowed to Traverse Across US Carried Explosives to Self-Detonate.
• Republicans to Announce Probe into China Spy Balloon Humiliation on Same Day as Biden’s State of Union (VIDEO).
• ” It Could Have Been a Vaccine…” – UFC Fighter Damon Jackson Reveals His Brother Dies Suddenly Following Receiving COVID Shot (VIDEO).
• Participants with “Jesus” Shirts Demonstrate at Mall of America in Response to Man Wearing “Jesus Saves” Shirt Being Asked to Leave 2 Weeks Ago.
• ‘1923’ TV Show Pays Tribute to 32 Year Old Production Supervisor Who Tragically ‘Died Suddenly’.
• FTX Is Asking for Money Sent to Political Donors to Be Returned – But the Real Amount of Money Laundered to Politicians is Still Unknown.
• EXCLUSIVE: The Same Person Who Slipped Up that Obama Was Spying on Trump Is the Same Person Who Oversaw DoD Unit that Sent $23 Million to Hunter’s Metabiota.
• Dr. Corsi: Why Obama, the FBI, and the CIA Orchestrated the Takedown of General Michael Flynn – Part 2.
• UK Regulator Finds Pfizer Guilty of Violating Three Sections of the British Pharmaceuticals Code of Practice.

The Epoch Times:

• Senate Defense Panel to Hold Hearing for ‘Real Answers’ Over Chinese Balloon: Sen. Tester.
• Analysts Still Cautious on China’s Economy.

Twitter: 

• @MarketRebels - Retail market orders as % of market volume surpasses previous record numbers. (graph)
• @AgentTruthTell3 - WAKE UP! 'Dystopian Nightmare': Australian Sen. Roberts on the WHO's Dictator-Style Power Grab. EVIL @WHO is demanding the POWER to DICTATE HEALTH policy WORLDWIDE, including: • COMPULSORY JABS • LOCKDOWNS • BUSINESS and BORDER closures • DETENTION of NON-Compliant. (video)
• @News_all_time - Apocalyptic scenes from South Turkey. (video)
• @theinformantofc - Grammy #Satan performance sponsored by #Pfizer. (video)
• @CitizenFreePres -  The sun is up in Kahramanmaras after a violent 7.8 magnitude earthquake struck Turkey in the middle of the night. Cries in the streets and destruction as far as the eye can see. Thousands feared dead.

OpenVAERS:

• VAERS US COVID Vaccine Adverse Event Reports. 931,816 Reports(+2,590 from prior week) Through January 27th, 2022.

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.

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 104.0 +4.5 basis points. 

• China Sovereign CDS 56.5 +5.75 basis points. 
• China Iron Ore Spot 122.1 USD/Metric Tonne -1.0%.

• Bloomberg Emerging Markets Currency Index 48.07 -.05%.
• Bloomberg Global Risk-On/Risk Off Index  58.9 +.8%. 
• Bloomberg US Financial Conditions Index .31 -9.0 basis points.
  
• Volatility Index(VIX) futures 20.9-.5%.
• Euro Stoxx 50 futures +.28%.

• S&P 500 futures +.21%.

• NASDAQ 100 futures +.27%.  

Morning Preview Links

BOTTOM LINE: Asian indices are mostly higher, boosted by energy and industrial shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower.  The Portfolio is 25% net long heading into the day.