Stocks Sharply Lower into Final Hour on Diminished Fed Rate-Cut Hopes, Earnings Outlook Concerns, Regional Bank Worries, Tech/Financial Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Above Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 14.0 +5.0%
• DJIA Intraday % Swing .44% +15.0%
  
• Bloomberg Global Risk On/Risk Off Index 58.6 -3.9%

• Euro/Yen Carry Return Index 171.2 -.9%

• Emerging Markets Currency Volatility(VXY) 7.3 unch.

• CBOE S&P 500 Implied Correlation Index 18.4 +9.6% 

• ISE Sentiment Index 149.0 +18.0
  

• Total Put/Call .84 -5.6%

• NYSE Arms .83 -30.8% 
• NYSE Non-Block Money Flow -$46.8M 
  

Credit Investor Angst:

• North American Investment Grade CDS Index 55.3 +2.1%
  

• US Energy High-Yield OAS 331.62 +3.6%
• Bloomberg TRACE # Distressed Bonds Traded 310 +3
  

• European Financial Sector CDS Index 68.93 +2.2% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 201.30 +4.9%
  

• Italian/German 10Y Yld Spread 156.0 basis points +3.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 100.81 -.59%
  

• Emerging Market CDS Index 180.18 +1.4%
• Israel Sovereign CDS 129.7 +.02%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 24.44 +.10%

• 2-Year SOFR Swap Spread -14.75 basis points -.75 basis point
  

• Treasury Repo 3M T-Bill Spread 4.25 basis points -.75 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -10.5 -6.0 basis points
  
• MBS  5/10 Treasury Spread 138.0 -5.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 897.0 -12.0 basis points
  
• Avg. Auto ABS OAS 70.0 -1.0 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 40.79 -.01%
• 3-Month T-Bill Yield 5.36% +1.0 basis point
  

• China Iron Ore Spot 130.0 USD/Metric Tonne +.16%
• Dutch TTF Nat Gas(European benchmark) 30.2 euros/megawatt-hour +2.2%

• Citi US Economic Surprise Index 25.7 -2.1 points

• Citi Eurozone Economic Surprise Index -1.1 +.2 point

• Citi Emerging Markets Economic Surprise Index -1.5 +2.1 points
• S&P 500 Current Quarter EPS Growth Rate YoY(176 of 500 reporting) +.4% +7.7 percentage points
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 243.75 +.03:  Growth Rate +10.1% unch., P/E 20.0 -.2
  
• S&P 500 Current Year Estimated Profit Margin 11.48% -6.0 basis points
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(4 of 10 reporting) +31.1% +47.7 percentage points
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 294.58 -.02: Growth Rate +38.1% unch., P/E 30.9 -.9
  
• Bloomberg US Financial Conditions Index .94 unch.
  
• Bloomberg Euro-Zone Financial Conditions Index .76 +3.0 basis points
  
• US Yield Curve -29.25 basis points (2s/10s) +1.0 basis point
  
• US Atlanta Fed 1Q GDPNow Forecast +3.0% unch.
  
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 64.4% -.3 percentage point
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +2.66% unch.: CPI YoY +2.96% unch.
  
• 10-Year TIPS Spread 2.25 -1.0 basis point
  
• Highest target rate probability for March 20th FOMC meeting: 62.5%(+3.7 percentage points) chance of 5.25%-5.5%. Highest target rate probability for May 1st meeting: 58.6%(+4.4 percentage points) chance of 5.0%-5.25%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -306 open in Japan 
• China A50 Futures: Indicating +13 open in China

• DAX Futures: Indicating -1 open in Germany

Portfolio:

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

• Disclosed Trades: Added to my (IWM)/(QQQ) hedges and to my emerging market shorts
  

• Market Exposure: Moved to 25% Net Long
  

Bear Radar

Style Underperformer:

• Large-Cap Growth -1.3%
  

Sector Underperformers:

• 1) Regional Banks -3.8% 2) Networking -2.3% 3) Internet -1.6%

Stocks Falling on Unusual Volume: 

• CSWC, ENVA, SANM, BOOM, OZK, EGBN, GOOG, TER, ROK, MKTX, EXTR and AMSC
  

Stocks With Unusual Put Option Activity:

• 1) NYCB 2) FGEN 3) CBAY 4) ETN 5) FAST
  

Stocks With Most Negative News Mentions:

• 1) NYCB 2) ROK 3) EXTR 4) CRCW 5) GPI
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Value +.1%
  

Sector Outperformers:

• 1) Medical Equipment +1.8% 2) Alt Energy +1.5% 3) Pharma +.8%

Stocks Rising on Unusual Volume:

• CCTG, ASH, RUN, SPR, MANH, DWAC, PARA, NOVA, SYK, EAT, EW, TEVA, VERA, CGEM, ZGN, KALV, TGI, RNR, NVO, SLGN, FTV, BA, IMCR, RDY, PCVX, CLS, ALPN, COR, ATGE, ZBH, ADP, FUSN, ZIM, CVLT, EQR, PII, MBUU, PII, LUNG, MMYT and CCL
  

Stocks With Unusual Call Option Activity:

• 1) NYCB 2) FGEN 3) CBAY 4) ETN 5) FAST

Stocks With Most Positive News Mentions:

• 1) PLUG 2) POWL 3) MANH 4) PARA 5) EW
  

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:

• (MO)/1.18
• (BDX)/2.40
• (BC)/1.65
• (CAH)/1.60
• (ETN)/2.47
• (HON)/2.59
• (ITW)/2.41
• (IP)/.34
• (MRK)/-.11
• (PH)/5.26
• (PTON)/-.54
• (PBI)/.02
• (DGX)/2.11
• (RCL)/1.14
• (SBH)/.37
• (SNY)/.17
• (SIRI)/.08
• (SWK)/.79
• (TSCO)/2.22
• (TT)/2.13
  

After the Close: 

• (AMZN)/.80
• (AAPL)/2.10
• (BZH)/.71
• (CLX)/1.09
• (DECK)/11.45
• (HUBG)/.52
• (META)/4.83
• (MCHP)/1.04
• (SKYW)/.15
• (X)/.28
• (WYNN)/1.14
  

Economic Releases

7:30 am EST

• Challenger Job Cuts YoY for Jan.
  

8:30 am EST

• 4Q Non-Farm Productivity is estimated to rise +2.5% versus a +5.2% gain in 3Q.
• 4Q Unit Labor Costs are estimated to rise +1.2% versus a -1.2% decline in 3Q.
• Initial Jobless Claims for last week are estimated to fall to 212K versus 214K the prior week.
• Continuing Claims are estimated to rise to 1838K versus 1833K prior.
  

10:00 am EST

• Construction Spending MoM for Dec. is estimated to rise +.5% versus a +.4% gain in Nov.
• ISM Manufacturing for Jan. is estimated at 47.2 versus 47.2 in Dec. 
• ISM Prices Paid for Jan. is estimated to rise to 46.2 versus 45.2 in Dec.
  

Afternoon

• Wards Total Vehicle Sales for Jan. is estimated to fall to 15.7M versus 15.83M in Dec.
  

Upcoming Splits 

• None of note
  

Other Potential Market Movers

• The US govt. funding deadline, weekly EIA natural gas inventory report, (DOX) annual meeting, (TXN) business update and the (PSMT) annual meeting 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 +7.9% Above 100-Day Average 
• Nasdaq/NYSE Volume Ratio 9.6 -.2
  
• 7 Sectors Declining, 4 Sectors Rising
• 41.2% of Issues Advancing, 56.2% Declining 
• TRIN/Arms .87 -27.6% 
• Non-Block Money Flow -$41.5M
  
• 130 New 52-Week Highs, 21 New Lows
• 62.3%(-.1%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 67.0 +2.0
  

Other:

• Bloomberg Global Risk-On/Risk-Off Index 57.5 -5.7%
• Bloomberg Cyclicals/Defensives Pair Index 137.2 -.84%
  
• Russell 1000: Growth/Value 18,737.6 -1.3%
• CNN Fear & Greed Index 69.0 (Greed) -5.0
• 1-Day Vix 14.0 -3.1%
  
• Vix 14.2 +7.0%
  
• Total Put/Call .87 -2.3%

Wednesday Watch

X:

• @LaraLogan - In case you missed it… (video)
• @FoxNews - Ex-FBI official warns Biden's open border could lead to 10/7 Israel-style attack: 'Greatest risk in lifetime'.
• @JunkScience - This is why governments want vehicles to be electric and equipped with 'kill switches'. Gasoline is freedom. EVs are slavery. (video)
• @wideawake_media - Founder of the WEF, Klaus Schwab, openly brags about infiltrating the governments of the world. "What we are very proud of now [is] that we penetrate the cabinets. [More than half of the Canadian cabinet ministers] are actually Young Global Leaders of the World Economic Forum... It's true in Argentina, and it's true in France now, with the president [being] a Young Global Leader." (video) Cheerleaders for the "human-induced climate change" hoax, Al Gore and John Kerry, predicting that the polar ice caps would be gone by 2014. (video) Archbishop Vigano: The WEF is threatening the heads of government of the 20 most industrialised nations in the world to carry out the Great Reset.  It is a global coup d'etat, against which it is essential that people rise up. Those who govern nations have all become either enslaved or blackmailed by this international mafia. Bill Gates, speaking at the WEF: In order to achieve Net Zero, aggressive carbon taxes need to be imposed on first world countries, in order to create an artificial demand for "clean products", so that lower income countries can benefit from lower costs. (video) Australian senator, Alex Antic, exposes the totalitarian aspirations of Klaus Schwab's World Economic Forum, and its 'Great Reset' agenda, in the Australian parliament. (video)
• @hodgetwins - It doesn’t take long to lose your country. Venezuela timeline:
• @BGatesIsaPsycho - Europe is rising & its glorious. I’m guessing they’ve also realised the extent of the Global Geo-Engineering exercise that’s currently poisoning their crops, animals, land, water courses & them. (video) Paris, France. Reports Macron has mobilised 15,000 additional Police to combat the on-going Farmer protests. How long till the military get called in? This is a full blown Revolution & it will NOT be televised on Mainstream News.
• @libsoftiktok - A terrorist from the Somali terror group al-Shabaab, illegally crossed our border in California in March 2023. He was released shortly after. He was arrested this month in Minnesota. A terrorist was freely roaming our country for almost a year before being caught!! Our border is wide open. We have no idea who’s in our country. It’s terrifying.
• @CraigSawmanSawyer - George Soros Owns Taylor Swift… Just like I said. There’s a nefarious agenda behind it. (video)
• @amuse - TERROR: Why isn’t this the headline in every paper in America? Biden’s Sr Director for Intelligence on the National Security Council, Maher Bitar, was also an official of UNRWA while the group was providing material support to Hamas.
• @4Mischief - Marine who worked at the southern border talks about the potential terrorists ~ “As soon as they figure out how to get a nuclear device in here, we will lose a city. Guaranteed”. (video)
• @nicksortor - MASSIVE RED FLAGS: HAWAII GOVERNMENTS CENSORING WHO WAS CONTROLLING MAUI FIRE RESPONSE. (records)
• @TuckerCarlson - War with Iran? Yes. We’re already in it. Joe Kent did 11 combat tours in the U.S. Army. His wife Shannon was killed serving in Syria. Here’s his informed view of what that war will mean. (video)
• @WallStreetApes - Hidden Camera Catches Michigan Senator Mike Shirkey Calling The January 6th “Insurrection” Capitol Riot A "Big Hoax" & "Staged". They All Know But Do Nothing. EXTREMELY CONCERNING. Does This Confirm War Is Coming? 2024 Health Insurance Policies Updated With NEW Exclusions & Expenses Not Covered “Treatment of an injury or a sickness, which is due to war, declared or undeclared, riot, or insurrection.”
• @bambkb - Former CSIS intelligence officer, Michael Juneau-Katsuya  claims that the government of Canada has been INFILTRATED and COMPROMISED for a very LONG time (video).
• @CollinRugg - NEW: Joe Rogan goes off on liberalism, says he was a liberal his whole life but can no longer support their cause because it has "gone full communist." (video)
• @stkirsch - BREAKING: If your parents got dementia after getting the COVID vaccine, it's likely the vaccine that did it. The CDC simply forgot to tell you it causes dementia.
• @liz_churchhill10 - The ‘HIV Pandemic’ Wayback Playback. (video)
• @TheChiefNerd - New Peer-Reviewed Study Finds ‘COVID-19 Vaccination is Strongly Associated w/ a Serious Adverse Safety Signal of Myocarditis, Particularly in Children and Young Adults Resulting in Hospitalization and Death’.
• @TaraBull808 -  France is in full Revolt against the globalists. French farmers have had enough. Truckers and construction workers join the farmers to stand against Macron & his net zero globalist policies. They’re holding a 5 day blockade on Paris surrounding the city and blocking all goods from entering. This is just the beginning. (video)
  

OpenVAERS:

• VAERS US COVID Vaccine Adverse Event Reports. 1,000,725 Reports(+2,808 from prior report) Through December 29th, 2023.

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 -.5% to +.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 101.5 +.25 basis point.

• China Sovereign CDS 64.75 unch.
  
• China Iron Ore Spot 131.6 USD/Metric Tonne -1.0%.

• Bloomberg Emerging Markets Currency Index 40.8 -.03%.
• Bloomberg Global Risk-On/Risk Off Index 59.3 -2.8%.
• Volatility Index(VIX) futures 14.2 +1.1%.
• Euro Stoxx 50 futures -.13%.

• S&P 500 futures -.38%.

• NASDAQ 100 futures -.82%.  

Morning Preview Links

BOTTOM LINE: Asian indices are mostly lower, weighed down by technology and industrial shares in the region. I expect US stocks to open modestly lower and to maintain losses into the afternoon.  The Portfolio is 75% net long heading into the day.