Stocks Slightly Lower into Afternoon on US Policy-Induced Stagflation Fears, China Economy Worries, Technical Selling, Retail/Alt Energy Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Almost Every Sector Declining
  

• Volume: Around Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 13.0 -.46%
• DJIA Intraday % Swing .39% -32.6%
  
• Bloomberg Global Risk On/Risk Off Index 58.2 -3.0%

• Euro/Yen Carry Return Index 170.2 -.4%

• Emerging Markets Currency Volatility(VXY) 7.89 +.1%

• CBOE S&P 500 Implied Correlation Index 21.3 -.14% 

• ISE Sentiment Index 125.0 +9.0
  

• Total Put/Call .88 +6.0%

• NYSE Arms 1.66 +86.5% 
• NYSE Non-Block Money Flow -$252.86M 
  

Credit Investor Angst:

• North American Investment Grade CDS Index 62.38 +.62%
  

• US Energy High-Yield OAS 350.76 +1.1%
• Bloomberg TRACE # Distressed Bonds Traded 361 +9.0
  

• European Financial Sector CDS Index 76.73 +1.0% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 235.44 +.2%
  

• Italian/German 10Y Yld Spread 174.0 basis points -3.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 100.4 +2.7%
  

• Emerging Market CDS Index 185.5 -.17%
• Israel Sovereign CDS 114.17 -.36%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 25.48 +.35%

• 2-Year SOFR Swap Spread -19.75 basis points +.25 basis point
  

• TED Spread 24.5 basis points -4.0 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -10.75 +1.0 basis point
  
• MBS  5/10 Treasury Spread 153.0 +1.0 basis point
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 950.0 +3.0 basis points
  
• Avg. Auto ABS OAS 86.0 +1.0 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 41.56 -.14%
• 3-Month T-Bill Yield 5.35% -3.0 basis points
  

• China Iron Ore Spot 129.0 USD/Metric Tonne -.04%
• Dutch TTF Nat Gas(European benchmark) 38.13 euros/megawatt-hour -4.9%

• Citi US Economic Surprise Index 14.3 -1.6 points

• Citi Eurozone Economic Surprise Index -13.9 +4.7 points

• Citi Emerging Markets Economic Surprise Index 24.5 +.8 point
• S&P 500 Current Quarter EPS Growth Rate YoY(492 of 500 reporting) +4.5% unch.
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 241.92 -.34:  Growth Rate +10.8% +1.4 percentage points, P/E 18.9 +.1
  
• S&P 500 Current Year Estimated Profit Margin 12.13% +1.0 basis point
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(9 of 10 reporting) +50.6% unch.
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 285.21 +.32: Growth Rate +33.8% +.2 percentage point, P/E 28.5 +.1
  
• Bloomberg US Financial Conditions Index .46 -6.0 basis points
  
• Bloomberg Euro-Zone Financial Conditions Index .27 -2.0 basis points
  
• US Yield Curve -41.75 basis points (2s/10s) -4.5 basis points
  
• US Atlanta Fed 4Q GDPNow Forecast +1.19% unch.
  
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 56.5% -1.9 percentage points
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +3.46% unch.: CPI YoY +3.04% unch.
  
• 10-Year TIPS Spread 2.20 -2.0 basis points
  
• Highest target rate probability for Jan. 31st FOMC meeting: 85.5%(-1.3 percentage points) chance of 5.25%-5.5%. Highest target rate probability for March 20th meeting: 55.7%(+4.7 percentage points) chance of 5.0%-5.25%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +126 open in Japan 
• China A50 Futures: Indicating +16 open in China

• DAX Futures: Indicating +32 open in Germany

Portfolio:

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

• Disclosed Trades: None
  

• Market Exposure: 75% Net Long
  

Bear Radar

Style Underperformer:

• Small-Cap Value -1.3%
  

Sector Underperformers:

• 1) Retail -2.4% 2) Alt Energy -2.4% 3) Gambling -2.1%

Stocks Falling on Unusual Volume: 

• HTHT, OLMA, SSL, ATAT, FIVN, EDU, SWTX, IAS, CHTR, LBRDK, EVH, GME, MMSI, SAVE and SPHR
  

Stocks With Unusual Put Option Activity:

• 1) GTLB 2) HA 3) S 4) PCG 5) CHTR
  

Stocks With Most Negative News Mentions:

• 1) DBI 2) CRMT 3) DOGO 4) ALB 5) CHTR
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +.3%
  

Sector Outperformers:

• 1) I-Banking +.3% 2) Insurance +.1% 3) Healthcare Providers +.1%

Stocks Rising on Unusual Volume:

• VKTX, GTLB, CERE, AGRO, HUT, MLTX, METC, SRRK, YPF, HOOD, AVDL, GCT, SJM, BLDR, ALK, CVS, SIG, MSTR, HCP, T, EYPT, RIOT and ALKT
  

Stocks With Unusual Call Option Activity:

• 1) PPC 2) GTLB 3) EB 4) CHTR 5) PR

Stocks With Most Positive News Mentions:

• 1) GTLB 2) AZO 3) HOOD 4) SJM 5) HOV
  

Charts:

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

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

Earnings of Note 
Company/Estimate 

Before the Open:

• (BF/B)/.51
• (CPB)/.87
• (KFY)/.95
• (OLLI)/-.45
  
• (THO)/.96
• (UNFI)/-.32
  

After the Close: 

• (AI)/-.18
• (CHPT)/-.31
• (CHWY)/-.06
• (GME)/-.08
• (OXM)/.96
• (SMTC)/-.15
• (VRNT)/.60
  

Economic Releases

8:15 am EST

• The ADP Employment Change report for Nov. is estimated to rise to 130K versus 113K in Oct. 

8:30 am EST

• Final Non-Farm Productivity/Unit Labor Cost readings for 3Q. 
• The Trade Balance report for Oct. is estimated to widen to -$64.2B from -$61.5B in Sept.
  

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -567,750 barrels versus a +1,610,000 barrel gain the prior week. Gasoline supplies are estimated to rise by +1,008,750 barrels versus a +1,764,000 barrel gain the prior week. Distillate inventories are estimated to rise by +1,060,750 barrels versus a +5,217,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to rise by +.95% versus a +2.8% gain prior.
  

Upcoming Splits 

• None of note
  

Other Potential Market Movers

• The weekly MBA Mortgage Applications report, Barclays Tech Conference, Goldman Sachs Financial Services Conference, Wolfe Research Small/Mid-Cap Conference, Morgan Stanley Consumer/Retail Conference, Barclays TMT Conference, (XOM) analyst meeting, (MCD) investor meeting. (CSCO) annual meeting and the Singular Research Best of the Uncovered Conference could also impact global trading tomorrow.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running +4.5% Above 100-Day Average 
• Nasdaq/NYSE Volume Ratio 11.6 +.2
  
• 9 Sectors Declining, 2 Sectors Rising
• 33.4% of Issues Advancing, 64.1% Declining 
• TRIN/Arms 1.46 +64.0% 
• Non-Block Money Flow -$253.4M
  
• 71 New 52-Week Highs, 10 New Lows
• 53.0%(-1.9%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 67.0 -4.0

Other:

• Bloomberg Global Risk-On/Risk-Off Index 58.4 -2.6%
  
• Russell 1000: Growth/Value 18,323.1 +.82%
  
• 1-Day Vix 8.3 -16.2%
  
• Vix 13.2 +.6%
  
• Total Put/Call .81 -2.4%

Tuesday Watch

Night Trading 

• Asian equity indices are -.75% to +.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 97.75 +.5 basis point.

• China Sovereign CDS 59.5 +2.5 basis point2.
  
• China Iron Ore Spot 128.6 USD/Metric Tonne -.22%.

• Bloomberg Emerging Markets Currency Index 41.6 unch.
• Bloomberg Global Risk-On/Risk Off Index 62.3 +3.7%.
  
• Bloomberg US Financial Conditions Index .46 -5.0 basis points.
  
• Volatility Index(VIX) futures 15.6 +.5%.
• Euro Stoxx 50 futures +.09%.

• S&P 500 futures -.16%.

• NASDAQ 100 futures -.15%.  

Morning Preview Links

BOTTOM LINE: Asian indices are mostly lower, weighed down by technology and commodity 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.