Stocks Modestly Lower into Final Hour on Falling Fed Rate-Cut Odds, Rising Long-Term Rates, Dollar Strength, Alt Energy/Airline 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) 13.7 -.9%
• DJIA Intraday % Swing 1.07 -7.8%
  
• Bloomberg Global Risk On/Risk Off Index 61.0 +5.2%

• Euro/Yen Carry Return Index 172.4 -.24%

• Emerging Markets Currency Volatility(VXY) 7.3 +.69%

• CBOE S&P 500 Implied Correlation Index 17.6 -10.0% 

• ISE Sentiment Index 149.0 unch.
  

• Total Put/Call .94 -10.5%

• NYSE Arms 1.04 +7.2% 
• NYSE Non-Block Money Flow -$269.0M 
  

Credit Investor Angst:

• North American Investment Grade CDS Index 54.9 +.4%
  

• US Energy High-Yield OAS 326.2 +.8%
• Bloomberg TRACE # Distressed Bonds Traded 324 -2
  

• European Financial Sector CDS Index 69.7 +1.1% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 208.5 +1.2%
  

• Italian/German 10Y Yld Spread 157.0 basis points -1.0 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 100.67 -.15%
  

• Emerging Market CDS Index 180.43 -.52%
• Israel Sovereign CDS 125.0 -5.4%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 24.49 unch.

• 2-Year SOFR Swap Spread -13.5 basis points -.5 basis point
  

• Treasury Repo 3M T-Bill Spread 7.5 basis points +1.5 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -5.5 +3.0 basis points
  
• MBS  5/10 Treasury Spread 153.0 +3.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 864.0 -9.0 basis points
  
• Avg. Auto ABS OAS 69.0 -2.0 basis points
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 40.5 -.4%
• 3-Month T-Bill Yield 5.38% +1.0 basis point
  

• China Iron Ore Spot 124.7 USD/Metric Tonne -1.2%
• Dutch TTF Nat Gas(European benchmark) 28.3 euros/megawatt-hour -3.3%

• Citi US Economic Surprise Index 42.6 +3.1 points

• Citi Eurozone Economic Surprise Index 9.0 +2.0 points

• Citi Emerging Markets Economic Surprise Index -2.4 unch.
• S&P 500 Current Quarter EPS Growth Rate YoY(238 of 500 reporting) +4.2% -.2 percentage point
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 244.99 +.85:  Growth Rate +10.7% +.4 percentage point, P/E 20.2 -.1
  
• S&P 500 Current Year Estimated Profit Margin 11.39% -5.0 basis points
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(7 of 10 reporting) +44.2% unch.
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 301.81 +5.99: Growth Rate +41.5% +2.8 percentage points, P/E 31.7 -.6
  
• Bloomberg US Financial Conditions Index .99 +9.0 basis points
  
• Bloomberg Euro-Zone Financial Conditions Index .73 +8.0 basis points
  
• US Yield Curve -31.75 basis points (2s/10s) +2.5 basis points
  
• US Atlanta Fed 1Q GDPNow Forecast +4.2% unch.
  
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 61.2% -3.0 percentage points
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +2.66% unch.: CPI YoY +2.96% unch.
  
• 10-Year TIPS Spread 2.26 +5.0 basis points
  
• Highest target rate probability for May 1st FOMC meeting: 54.5%(-5.4 percentage points) chance of 5.0%-5.25%. Highest target rate probability for June 12th meeting: 46.2%(-9.4 percentage points) chance of 4.75%-5.0%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -4 open in Japan 
• China A50 Futures: Indicating -59 open in China

• DAX Futures: Indicating +111 open in Germany

Portfolio:

• Higher:  On gains in my biotech/tech sector longs and index hedges

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

• Market Exposure: Moved to 100% Net Long
  

Bear Radar

Style Underperformer:

• Small-Cap Value -1.1%
  

Sector Underperformers:

• 1) Alt Energy -4.0% 2) Airlines -1.9% 3) Gold & Silver -1.9%

Stocks Falling on Unusual Volume: 

• CHTR, MCD, ADM, TREX, GFS, DOCU, PLRX, ZS, IRBT, JKS, QLYS, APD and SGML
  

Stocks With Unusual Put Option Activity:

• 1) IBB 2) VLY 3) XLRE 4) NAT 5) CAT
  

Stocks With Most Negative News Mentions:

• 1) NVTA 2) APD 3) QLYS 4) NAT 5) ZS
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +.1%
  

Sector Outperformers:

• 1) Disk Drives +2.2% 2) Pharma +1.8% 3) Semis +1.3%

Stocks Rising on Unusual Volume:

• FDMT, MOR, EVBG, BOWL, MSSC, SMCI, EL, GCT, DWAC, SPHR, ON, CTLT, ARGX, SWTX, MGNX, IDXX, ELAN, SLNO, LLY, ATXS, AMG, HPK, BABA, MORF, NVO, HPK and ARM
  

Stocks With Unusual Call Option Activity:

• 1) CARR 2) TSLL 3) EL 4) MOR 5) GEN

Stocks With Most Positive News Mentions:

• 1) NSSC 2) FDMT 3) EL 4) ON 5) CNA
  

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:

• (AGCO)/4.02
• (ARCB)/2.22
• (CMI)/4.45
• (DD)/.85
• (LLY)/2.30
• (ENR)/.57
• (FI)/2.15
• (IT)/2.83
• (HTZ)/-.04
• (J)/1.56
• (LEA)/3.12
• (SPR)/-.35
• (SPOT)/-.37
• (UBS)/.09
• (WAT)/3.55
  

After the Close: 

• (AB)/.63
• (DOX)/1.56
• (AMGN)/4.59
• (CSL)/3.55
• (CAVA)/.00
• (CMG)/9.71
• (CRUS)/2.01
• (CTSH)/1.04
• (ELF)/.57
• (EW)/.64
• (F)/.12
• (FTNT)/.43
• (GILD)/1.76
• (HRB)/-1.56
• (MSTR)/-.64
• (NBR)/-1.15
• (PAAS)/.13
• (PRU)/2.61
• (QGEN)/.55
• (SNAP)/-.17
• (VFC)/.77
• (WERN)/.44
• (YUMC)/.16
• (CARR)/.51
  

Economic Releases

• None of note

Upcoming Splits 

• None of note
  

Other Potential Market Movers

• The Fed's Harker speaking, Fed's Collins speaking, Fed's Mester speaking, EIA Short-Term Energy Outlook, API Weekly Crude Oil Stock report, 3Y T-Note auction, weekly US retail sales reports, IBD/TIPP Economic Optimism Index, (BEN) annual meeting, (DLB) annual meeting and the (ROK) annual meeting 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 +8.5% Above 100-Day Average 
• Nasdaq/NYSE Volume Ratio 9.1 +.8
  
• 8 Sectors Declining, 3 Sectors Rising
• 13.6% of Issues Advancing, 84.9% Declining 
• TRIN/Arms .97 unch.
  
• Non-Block Money Flow -$319.0M
  
• 54 New 52-Week Highs, 70 New Lows
• 56.9%(4.4%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 59.0 -3.0
  

Other:

• Bloomberg Global Risk-On/Risk-Off Index 60.7 +4.7%
• Bloomberg Cyclicals/Defensives Pair Index 136.9 -.55%
  
• Russell 1000: Growth/Value 19,430.9 +.8%
• CNN Fear & Greed Index 73.0 (Greed) +6.0
• 1-Day Vix 9.3 -24.4%
  
• Vix 13.8 -.4%
  
• Total Put/Call .95 -9.5%

Monday Watch

Today's Headlines

Bloomberg:

• US Promises More Mideast Strikes While Trying to Avert Wider War.
• China Set to Skirt Lunar New Year Cash Crunch on PBOC Injection.
• China Vows to Stabilize Markets After Rout, Offers No Detail.
• Trump Floats Chinese Goods Tariff Exceeding 60% If Elected.
• Paris Set to Triple Parking Fees for SUV Drivers After Vote.
• Oil Rebounds as US Attacks on Houthis Ratchet Tensions Higher.
• Treasuries Extend Fall as Powell Adds to Jobs Blow: Markets Wrap.
• Powell Tells ‘60 Minutes’ Fed Is Wary of Cutting Rates Too Soon.
• Read the Full Transcript of Powell’s Interview With CBS’s ‘60 Minutes’.
• Creditor Battles Are Hobbling Risky Debt: Credit Weekly.
• Bond Market Rate-Cut Bets Rattled by Powell Pushback, Jobs.
• Harvard Names Ex-Merck CEO Frazier, KKR’s Bae to Its Board. 
• Why NYC Apartment Buildings Are on Sale Now for 50% Off.

Zero Hedge:

• Tucker Carlson Spotted In Moscow As Neocons Melt Down Over Potential Putin Interview.
• Powell Tells 60 Minutes Fed "Not Likely" To Cut In March.
• France Caves To Farmers As Ireland 'Solidarity' Protests Kick Off.
• Dark Money Group Plows Millions Into Biden Campaign.
• These Are The Most Common Types Of Cancer In The US.
• Escalation And Expansion.
• Weekend News Round Up - Newsquawk Asia-Pac Market Open.
• Denver Starts Booting Migrants From Shelters As City Nears 'Breaking Point'.
• Scientists Warn: Declining Academic Standards Mixed With DEI Recipe For Disaster.
• Are Bankruptcies Of Some US States In The Future?
• DOE To Push Forward $1.2 Billion Biden Plan To Expand Federal College-Prep Aid To Illegal Immigrants.
• Ex-Trump Official Dies After Being Shot In Violent DC Carjacking Spree.
• The Dissatisfaction Of Young Voters.
• The Ninth Circuit: Enemy Of Cities Trying To Shut Down Homeless Camps.
• US Coalition Has Attacked Nearly 40 Houthi Sites In Yemen This Weekend.
• Trump Spent Nearly $50 Million In Legal Fees In 2023, Filings Show.
• These Were The Best- (And Worst-) Performing IPOs Of 2023.
• Warning Issued After Researchers Link Energy Drinks To Suicidal Thoughts In Children.
• A Record $10 Trillion In US Treasuries Coming To Market In 2024.
• Hartnett: The Regional Bank Crisis Is Stoking The AI Bubble Because Powell Has Become A Paper Tiger.
• Senior BBC Employee Branded White People A "Parasitical Deviant Breed".
• UK's "Online Safety Act" Officially Grants MSM Premission To Publish Lies.
• Progressive Dems In Congress Move To Block Funding For Israeli Weapons.

 Wall Street Journal:

• Power Corrupts, Absolutely. A global government to monitor AI? That sounds great to those obsessed with control. 
• ‘Shrinkflation’ Is in the Air, Online and Everywhere Else. You pay more for ‘extras’ that used to be part of the base price. The CPI doesn’t measure that.
• The Israeli Firebrand Driving Netanyahu Further to the Right.
• Border Deal to Cut Illegal Immigration Is Released After Months of Talks.
• Powell Says Fed Has New Focus: When to Cut Rates.
• Burritos and Big Macs to Cost More in California as Pay Rises.
• In the Battle Over Early Algebra, Parents Are Winning.
• Citi’s Big Turnaround Hinges on This Lagging Business.
• One Country’s Dream of EV-Driven Prosperity Helps Fuel a Coal Binge Instead.

CNBC:

• Powell insists the Fed will move slowly on interest rate cuts.
• Poll: 20-point deficit on handling economy highlights Biden’s struggles against Trump.
• Algorithms, bias and hallucinations: 20 important AI terms investors should know
• White House, Congress divide on Red Sea defense is getting dangerous for economy
• The CEO ‘return to office or else’ is having limited success in 2024
• Satya Nadella’s first decade as Microsoft CEO was defined by cloud. What’s next?
• LVMH takes aim at $30 billion watch market with high-end, reinvented pieces.

Reuters:

• Foxconn sees 'slightly better' 2024, warns on AI chip shortage.
• Wall St Week Ahead Scorching US economy throws off market's Fed cut narrative.

MarketWatch.com:

• Gold and platinum are giving strong clues that stocks could gain 15% or more this year.

NewsMax:

• US Planning More Strikes Against Iran-Backed Terrorists.
• Ric Grenell to Newsmax: 'Of Course' US Is at War With Iran.
• Iran-Backed Militia Responds: 'Every Action Elicits a Reaction'.
• Joe Lieberman: Trump 'Absolutely Got the Middle East Right'.
• Mark Morgan: U.S. 'Already Infiltrated' By Terrorists at Border.
• Rep. Kiggans: Biden Failures Brought Middle East Tension.

Fox News:

• Trump tells Maria Bartiromo what he wants in a running mate and drops two names.
• Former NFL player identifies this epidemic as America’s modern civil rights challenge.
• Elon Musk slams Biden, drops fiery take on America's border crisis.

TheGatewayPundit.com:

• EVIDENCE Provided by Michigan’s Dishonest SOS Reveals HUNDREDS of Individuals Cast More Than One Vote Under Same Voter ID in 2020, 2022 and 2023 Elections—Why Hasn’t Anyone Been Prosecuted?
• George Stephanopoulos Abruptly Ends Interview with Senator JD Vance Amid Argument Over US Constitution (VIDEO).
• Union Leadership Beholden To Democrats, While Trump is Out to Save the Working Class.
• Special Agent David Lazarus Who Lied Under Oath Against the Oath Keepers During Their Trial Is Leaving the Department for Another Agency – Will Walk Free following His Confirmed Perjury in Court.
• Nikki Haley Gets ROASTED After She Runs to CNN to Celebrate Trump Criminal Trials Brought by Biden’s Corrupt DOJ (VIDEO).
• Texas Man Poses As Child to Lure Registered Sex Offender, Then Kills Him.
• TSA Rolling Out Worrying New Tech at More Than 400 Airports.
• “A Presidency in Peril”: Trump Widens Lead Over Biden in Brutal NBC Poll for Biden.
• Newly Resurrected Video of E. Jean Carroll from Her 90’s TV Show Reveals a Completely Unpredictable and Deranged Woman Obsessed with Men and Sex (VIDEO).
• Speaker Mike Johnson Drops Bomb: Biden Is Not the One in Charge.
• The Toxicology Report for the 3 Dead Chiefs Fans Is In.
• President Trump with Maria Bartiromo: “I Believe We’re Going to Have a Terrorist Attack – 100%” (VIDEO).
• The World’s First Dating Website for the UNVACCINATED is Here! Sign up For “UNJECTED” Now and Meet Other Singles That SAID NO TO THE COVID VACCINE! VIDEOS!
• Maria Bartiromo After Speaking with President Trump: “I Think There Will Be Major Changes Made in the Republican National Committee Very Soon” (Video).
• The “We the People: Take Back Our Border” Trucker Convoy and Rallies Take Place in Texas, Arizona, and California.
• California School Drops $250,000 On ‘Woke Kindergarten’ Program to “Disrupt Whiteness”, Students’ Grades Dip Even Further.
• Report: Biden Regime Gave Millions of COVID Relief Funds to Undocumented Aliens.
• CNN’s Van Jones Says Young Voters Calling Biden ‘Genocide Joe’ is a ‘Big Problem for Him’ (VIDEO).
• Dr. Phil Arrives at Southern Border, Slams Biden After Realizing True Scale of the Crisis.
• Bill Maher Slams Biden for Claiming He Needs Additional Powers to Secure the Border: ‘Already Has Existing Law!’ (VIDEO). 
• Colorado Democrat Introduces ‘Pet Tax’ for All Animals and It’s Worse Than You Think.

The Epoch Times:

• CCP Punishes 6 Major Rating Agencies as China’s Stocks Plummet.

X:

• @KariLake - @Adrian_Fontes crafted Arizona's Election Procedures Manual to allow illegal immigrants to register as “federal-only” voters & cast ballots for the Presidential Election. This is what the #Bidenvasion has always been about.
• @WallStreetApes - It’s Official, Black Voters Know They’re Being Replaced With Illegal Immigrants. (video) Katie Hopkins Speaks With Nearby Hotel Owners Next To Illegal Immigrant Occupied Hotels. The Government Is Offering An Extra $300,000 Per Year On Top Of What The Hotel Would Normally Make. If They Convert Their Hotel To House Illegals Are tax payers okay with this? (video)
  
• @stkirsch - Federal agencies refuse to cooperate with Florida grand jury investigating COVID-19 vaccines, interim report reveals. So now you know: they won’t talk.
• @wendyp4545 - China's President Xi's only daughter Xi Mingze, married an American and lives here in the United States. She's a Harvard Grad who earned a bachelor of Arts degree in psychology from Harvard University. She graduated in 2014 after studying psychology and English. Her profession is "Researcher" but there are no known topics or categories available of any of her research.
• @TheChiefNerd -  Absolutely Damning New Review Finds mRNA Vaccine Boosters May Impair the Immune System: ‘Signs of Reduced Immune System Response Have Been Many’.
• @robinmonotti - TWO LEADING PRINCETON, MIT SCIENTISTS SAY EPA CLIMATE REGULATIONS BASED ON A ‘HOAX’:
• @VigilantFox -  Get ready for more of your tax dollars to be wasted on a “medical disaster.” Enter Ozempic, a diabetes and weight loss drug that is “going to be the highest-funded drug by the US taxpayer in history.” Ozempic has some severe problems, according to @CalleyMeans: 1. Gastrointestinal issues and stomach paralysis:... (list)
• @Real_RobN -  +74 counties across Georgia destroyed the original Dominion ballot images from the Nov 3, 2020, what they call an election. (video)
• @PeterSweden7 - "STOP LYING". Thousands of people have taken to the streets in Sweden to protest against left-wing bias in state funded mainatream media. (video)

OpenVAERS:

• VAERS US COVID Vaccine Adverse Event Reports. 1,000,725 Reports(+2,808 from prior week) 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 indices are -1.0% to unch. on average.
• Asia Ex-Japan Investment Grade CDS Index 100.25 -1.75 basis points.
  
• China Sovereign CDS 64.0 -1.5 basis points.
• China Iron Ore Spot 127.9 USD/Metric Tonne +1.3%.
  
• Bloomberg Emerging Markets Currency Index 40.6 -.15%
• Bloomberg Global Risk-On/Risk Off Index 59.4 +2.6%.
• Volatility Index(VIX) futures 15.7 +.7%. 
• Euro Stoxx 50 futures -.13%.
• S&P 500 futures -.24%.
• NASDAQ 100 futures -.27%.

Morning Preview Links

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