Stocks Falling Substantially into Final Hour on US Policy-Induced Stagflation Fears, Declining Fed Rate-Cut Odds, Earnings Outlook Worries, Alt Energy/Regional Bank Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Every Sector Declining
  

• Volume: Above Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 15.8 +13.4%
• DJIA Intraday % Swing 1.17 +72.0%
  
• Bloomberg Global Risk On/Risk Off Index 58.8 -.5%

• Euro/Yen Carry Return Index 174.5 +.4%

• Emerging Markets Currency Volatility(VXY) 6.8 -.7%

• CBOE S&P 500 Implied Correlation Index 19.5 +12.0% 

• ISE Sentiment Index 133.0 -6.0
  

• Total Put/Call .87 -16.4%

• NYSE Arms 1.28 +60.0% 
• NYSE Non-Block Money Flow -$531.7M 
  

Credit Investor Angst:

• North American Investment Grade CDS Index 55.3 +3.2%
  

• US Energy High-Yield OAS 310.4 +.19%
• Bloomberg TRACE # Distressed Bonds Traded 309 unch.
  

• European Financial Sector CDS Index 68.4 -.18% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 209.7 +.3%
  

• Italian/German 10Y Yld Spread 155.0 basis points unch.
  

• Asia Ex-Japan Investment Grade CDS Index 100.4 +.19%
  

• Emerging Market CDS Index 184.9 +3.4%
• Israel Sovereign CDS 114.5 -.02%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 24.6 unch.

• 2-Year SOFR Swap Spread -11.75 basis points +2.0 basis points
  

• Treasury Repo 3M T-Bill Spread 8.75 basis points +.5 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -6.0 unch.
  
• MBS  5/10 Treasury Spread 159.0 +6.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 839.0 -3.0 basis points
  
• Avg. Auto ABS OAS 68.0 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 40.3 -.23%
• 3-Month T-Bill Yield 5.38% unch.
  

• China Iron Ore Spot 128.2 USD/Metric Tonne -.29%
• Dutch TTF Nat Gas(European benchmark) 25.4 euros/megawatt-hour -1.1%

• Citi US Economic Surprise Index 44.7 +3.4 points

• Citi Eurozone Economic Surprise Index 22.3 +1.2 points

• Citi Emerging Markets Economic Surprise Index .2 -.8 point
• S&P 500 Current Quarter EPS Growth Rate YoY(351 of 500 reporting) +5.3% +.2 percentage point
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 245.55 +.19:  Growth Rate +10.9% +.1 percentage point, P/E 20.2 -.4
  
• S&P 500 Current Year Estimated Profit Margin 11.27% unch.
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(7 of 10 reporting) +44.2% unch.
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 305.93 +1.53: Growth Rate +43.4% +.7 percentage point, P/E 31.7 -1.0
  
• Bloomberg US Financial Conditions Index 1.09 -1.0 basis point
  
• Bloomberg Euro-Zone Financial Conditions Index .83 -8.0 basis points
  
• US Yield Curve -33.75 basis points (2s/10s) -3.25 basis points
  
• US Atlanta Fed 1Q GDPNow Forecast +3.4% unch.
  
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 59.8% +.9 percentage point
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +2.74% +8.0 basis points: CPI YoY +3.06% +12.0 basis points
  
• 10-Year TIPS Spread 2.29 +5.0 basis points
  
• Highest target rate probability for May 1st FOMC meeting: 63.9%(+24.6 percentage points) chance of 5.25%-5.5%. Highest target rate probability for June 12th meeting: 51.7%(+9.8 percentage points) chance of 5.0%-5.25%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -384 open in Japan 
• China A50 Futures: Indicating -76 open in China

• DAX Futures: Indicating -25 open in Germany

Portfolio:

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

• Small-Cap Value -3.8%
  

Sector Underperformers:

• 1) Alt Energy -6.0% 2) Gold & Silver -5.9% 3) Regional Banks -4.6%

Stocks Falling on Unusual Volume: 

• FROG, CRUS, AN, LBRDK, IMNM, BL, DNUT, SBLK, BDC, QSR, GOLD, NET, DDOG, CDNS, ZS, AHH, ANET, KALV, TNGX, PERI, ZTS, AGI, WSO, MAR, PAAS, WEAV, POWI, VNO, TTMI, BIIB, MCO, DBRG, EGO, INMD, OTTR, SHOP, IPGP, GT, ARM, CAR, TDC and WCC
  

Stocks With Unusual Put Option Activity:

• 1) CAR 2) TRIP 3) GTHX 4) ACI 5) FOXA
  

Stocks With Most Negative News Mentions:

• 1) TWOU 2) SIEN 3) TDC 4) ALT 5) WCC
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth -1.3%
  

Sector Outperformers:

• 1) Energy -.6% 2) Pharma -.6% 3) Insurance -.6%

Stocks Rising on Unusual Volume:

• BCYC, ASPN, TRIP, ZI, KLG, BRKR, ECL, MANU, METC, TRU, WM, LDOS, HWM, LSCC, GCT, YMAB and IEP
  

Stocks With Unusual Call Option Activity:

• 1) CAR 2) TRIP 3) GTHX 4) ACI 5) FOXA

Stocks With Most Positive News Mentions:

• 1) TRIP 2) JBLU 3) ZI 4) MEDP 5) ECL
  

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:

• (CME)/2.28
• (CNHI)/.42
• (GNRC)/2.08
• (KHC)/.77
• (LPX)/.54
• (MLM)/3.99
• (OC)/2.86
• (R)/2.74
• (SAH)/1.83
• (WMB)/.45
  

After the Close: 

• (ALB)/.98
• (CF)/1.56
• (CSCO)/.84
• (HUBS)/1.54
• (MTW)/.23
• (OXY)/.67
• (PTEN)/.18
• (RGLD)/.76
• (SUM)/.26
• (TWLO)/.57
• (UPWK)/.17
• (VECO)/.42
• (WH)/.90
  

Economic Releases

8:30 am EST

• PPI Revisions.
  

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory gain of +3,298.670 barrels versus a +5,520,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -1,757,830 barrels versus a -3,146,000 barrel decline the prior week. Distillate inventories are estimated to fall by -1,896,000 barrels versus a -3,221,000 barrel decline the prior week. 
  

Upcoming Splits 

• None of note
  

Other Potential Market Movers

• The Fed's Barr speaking, Fed's Goolsbee speaking, weekly MBA Mortgage Applications report, Thomson Reuters IPSOS PCSI for Feb., Oppenheimer Healthcare Life Sciences Conference, (UBER) investor meeting, (WMB) analyst day and the TD Cowen Aerospace/Defense 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 +16.5% Above 100-Day Average 
• Nasdaq/NYSE Volume Ratio 8.7 -2.4
  
• 11 Sectors Declining, 0 Sectors Rising
• 9.0% of Issues Advancing, 90.0% Declining 
• TRIN/Arms 1.01 +26.3%
  
• Non-Block Money Flow -$405.7M
  
• 30 New 52-Week Highs, 35 New Lows
• 57.9% (-8.5%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 56.0 -14.0
  

Other:

• Bloomberg Global Risk-On/Risk-Off Index 61.1 +3.7%
• Bloomberg Cyclicals/Defensives Pair Index 138.9 -.7%
  
• Russell 1000: Growth/Value 19,543.3 +.2%
• CNN Fear & Greed Index 71.0 (Greed) -8.0
• 1-Day Vix 11.0 -21.6%
  
• Vix 14.9 +6.9%
  
• Total Put/Call .86 -17.3%

Tuesday Watch

Evening Headlines

Bloomberg:    

• Farmers’ Revolt Threatens Election Year Upsets Around the World.
• Australia’s Services Inflation to Cool Only Gradually, RBA Says.
• Japan Stocks Advance, US Futures Dip Before CPI: Markets Wrap. 
• Oil Steadies After Six-Day Gain Ahead of OPEC Market Outlook.
• Commercial-Property Loans Coming Due in US Jump to $929 Billion.
• A $700 Billion Insurance Product Is Powering the US Credit Market Rally.
• Economists Haven’t Been So Critical of Tight Fed Since 2010.

Zero Hedge:

• Crowd Sets Waymo Driverless Car Ablaze In Lawless San Francisco.
• Invasion Spreads To Unfenced US Northern Border Amid "Record-Breaking Surge" Of Illegal Entries Detected.
• Best And Worst Metro Areas For First-Time Buyers In 2024.
• CRE Crash Unfolding: "Yes That's Not A Typo - It Literally Sold For $9 Per SQFT" .
• Democrats Strongly Support Mail-In Voting While Republicans Oppose, Poll Shows.
• Court Orders Netherlands To Halt F-35 Parts For Israel As EU Says "Too Many People" Are Dying.
• Meet Dr. Kathleen Hicks - SecDef Austin's Presumptive Replacement Woke Deep-Stater.
• NATO Chief Shocks With Prediction Of 'Decades-Long Confrontation' With Russia.
• Victor Davis Hanson: The Absurd Border Con.
• Listen In: Musk, Vivek, Vance, Sacks And Mike Lee Discuss "Impeachment Time Bomb" Hidden In Ukraine Funding Bill.
• Satanic Temple Claims Abortion Is Part Of Their Religion In Effort To Block Abortion Bans.
• NVDA's spectacular squeeze and upside down market risks.
• US stocks finished mixed with asset classes choppy ahead of US CPI data - Newsquawk Asia-Pac Market Open.
• Boston Couple Sign Up To House Illegal Immigrants, Get Four Delivered Within An Hour.
• Institutions Double Down On AI In trading — JPMorgan Survey.
• Mapping Global GDP Growth Forecasts By Country In 2024.
• Why Are Solar Panels 44% Cheaper In China Than The US?
• Small caps outperform after big tech reverses lower ahead of CPI - Newsquawk US Market Wrap.
• 0DTE Punters Pump And Dump Momentum Stocks As "Parabolic" Tech Hits An Airpocket.

Wall Street Journal:

• AI Is Starting to Threaten White-Collar Jobs.
• Stocks Are at Records, but Are They Expensive?
• Uterine Cancer Was Easy to Treat. Now It’s Killing More Women Than Ever.
• Cash-Flush Buyers Dip Into Distressed Commercial Real Estate.

CNBC.com:

• Wish’s deep discount sale to Singapore’s Qoo10 ramps up competition for Temu, Shein.
• Criminal sentencing of Binance founder CZ postponed to late April.
• Nvidia rally is fueling FOMO in overall market, Evercore’s Julian Emanuel warns.
• Arm shares jump 29% as post-earnings rally extends to second week.

Reuters:

• Uber, Lyft, DoorDash drivers to strike on Valentine's Day for fair pay.

MarketWatch.com:

• Arista beats on earnings, but its stock pulls back.
• Growth stocks are outperforming value by widest margin on record. Why that could soon change.
• JetBlue’s stock rallies after Carl Icahn takes nearly 10% stake in airline.
• Alphabet, Amazon likely to follow Meta by introducing first-ever dividends in 2024.
• Crypto stocks, funds rally after bitcoin breaks $50,000 for the first time since 2021.
• Stocks have been moving a lot more than usual after earnings. Here’s why, and what it could mean.

Newsmax:

• House Seeks Transcript of Hur's Incendiary Interview With Biden.
• Biden Calls Netanyahu 'A**hole'.
• Netanyahu Vows 'Total Victory'; 'More Than Half' of Hamas Killed.

Fox News:

• Chicago Dems turn on far-left mayor as migrant crisis wakes up voters.
• Passenger dies mid-flight after violent illness: 'Everyone was screaming'.

TheGatewayPundit.com:

• BREAKING: Judge Says Fulton County DA Fani Willis May Be DISQUALIFIED From Trump RICO Case, Moves Forward with Hearing (VIDEO).
• BREAKING: Lakewood Church Shooter Identified as Transgender Immigrant from El Salvador.
• New Looming EV Disaster Begins to Emerge.
• EXCLUSIVE: PragerU Kids’ Jill Simonian Speaks to TGP About Partnerships with State Education Departments to Bring Anti-Woke Educational Resources to Public and Charter School Students (VIDEO).
• Leo Hohmann: Report Calls for Limits on Air Travel.
• MUST SEE: Senator J.D. Vance Explains How Senate RINOs Pulled a Fast One to Destroy President Trump! – And How They Were Exposed (VIDEO).
• Democrat State Senator Shows His Support For Worshipping the Devil and Honors Satanists During Arizona Senate Floor Session (VIDEO).
• Friendly Reminder: 1936 Recorded the Hottest Temperatures in the United States – So Why Are They Hiding this Data?
• TRUMP’S TOUGH TALK WORKS: German Chancellor Olaf Scholz Now Vows To Meet NATO’s Agreed Minimum and Spend More Than 2% of GDP on Defense.
• WAYNE ROOT: I Did NOT Stand for Black National Anthem at the Super Bowl. Here are Some Important Questions for the NFL.
• Two Israeli Hostages Rescued from Barbarian Killers in Gaza After Biden Regime Told Israel Not to Enter Rafah.
• UPDATE: Shooter at Joel Osteen’s Megachurch had Pro-Palestinian Message on Gun.
• WATCH: Biden Joins TikTok — Despite Platform’s Ties to the Chinese Communist Party.
• The Pentagon and its CIA Germ Warfare Program.
• Yikes. KC’s Travis Kelce Sings Cringeworthy Song on Stage Following Super Bowl Victory (Video).

The Epoch Times:

• 25 Literary and Artistic Celebrities Die in China in Less than 40 Days.

X:

• @gatewaypundit - Service Members Were Coerced and Injured, and as a Result, They’ve Lost Nearly All Trust in Leadership Over the COVID-19 Shot.
• @JackPosobiec - BREAKING: THIS BILL WOULD HAVE TAKEN AWAY PRESIDENTIAL AUTHORITY ON THE BORDER IF IT HAD BEEN PASSED. THIS IS THE DEMOCRATS ENDGAME.
• @jalalalkali - #icespice performs at #fanatics #superbowl party. (video)
• @Drawandstrike - Notice how #IceSpice is looking up at the big screen, making sure everybody can see what she's doing and then throws up the devil sign with both hands and then does the double-hand collar lift to hold up the upside down cross to make sure attention is drawn to it. (video)
• @ForsigeNews - WATCH: American rapper (@icespicee) Ice Spice shocks #SuperBowl viewers with controversial attire, displaying upside-down cross, #Balenciaga linked to child trafficking, and flashing demonic hand gestures on big screen. #IceSpice. (video)
• @Grandwcn - #TaylorSwift, #BlakeLively and #IceSpice celebrating after the #Chiefs score touchdown.
• @Tackle71Wall - #norespect #Kelce #traviskelce Kelce a person in your position is a role model for children. You respect your elders and you respect your coach. There are young people who look up to you @tkelce (video)
• @rawsalerts - #BREAKING: At 10:50 P.M. EST the President of the United States (
  @JoeBiden) posted this photo on X along with the caption "Just like we drew it up." In the ALT text on the image it said: "dark brandon". (pic)
• @libsoftiktok - The LGBTQ Texas Church shooter was a migrant from El Salvador. She has a long criminal history dating back to 2005. She was also a Bernie supporter, had a “free palestine” sticker on her gun, and identified as transgender. This story is going to disappear really fast. (pic)
• @BGatesIsaPsycho - NET ZERO SCAM. Remember we don’t mine coal in Europe anymore because we’re ‘Green’. Instead we import Coal all the way from South Africa - queue of Diesel Guzzling Trucks laden with coal from Richards Bay - on their way to Europe so you can charge your electric car. (video)
• @songpinganq -  Temu has brought the Social Credit System on its platform since 2021, with the help of Chinese digital wallet WeChat. This woman failed to pay the bill ¥1139.00, the WeChat lowered her Social Credit Score from 643 to 546. Now she is banned from spending her own digital money. China forces farmers off the land and incarcerates them in high rise apartments, in 15-minute cities. Now, Chinese government is forcing farmers to sell their farmland. Soon there will be no family farms, left only industrial corporate farms. (video)
  
• @JDVance1 - I just sent the below memo to every one of my Republican colleagues in Congress. Buried in the bill’s text is an impeachment time bomb for the next Trump presidency if he tries to stop funding the war in Ukraine. We must vote against this disastrous bill.
• @TonyClimate - @NOAA used to know that 1921 was the hottest year on record in Texas, but sometime over the past decade they rewrote history. #ClimateScam (graph)
• @JunkScience - Inventing the climate hoax: "NASA scientists can calculate the 1884 global temperature within 0.01°C, and provide a very detailed map, despite having no data for most of the planet." (graph)
• @PierreKory - We spent trillions "fighting COVID-19" yet had more deaths than countries that did nothing. The public is waking up to this scam, so the WHO is enacting a draconian treaty to protect their racket. We must stop this at all costs. This article shows how.
• @_aussie17 - Kyoto University Professor Emeritus Masanori Fukushima on COVID vaccines: (video)
• @SteveDeaceShow - If you’ve never seen this, worth watching it. (video)
• @UltraDane - Everyone In America Needs To Watch This ~ UN - IOM - EU - UNICEF - Hebrew Immigrant Aid Society HIAS - Red Cross - Doctors Without Borders - United Nations Refugee Agency UNHCR Norwegian Refugee Council. These NGOs are purposely destroying our Country. (video)

OpenVAERS:

• VAERS US COVID Vaccine Adverse Event Reports. 1,003,176 Reports(+2,451 from prior report) Through January 26th, 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 +.25% to +1.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 100.25 unch.

• China Sovereign CDS 64.75 unch.
  
• China Iron Ore Spot 128.5 USD/Metric Tonne +.3%.

• Bloomberg Emerging Markets Currency Index 40.4 +.01%.
• Bloomberg Global Risk-On/Risk Off Index 59.7 +1.3%.
• Volatility Index(VIX) futures 14.9 -.1%.
• Euro Stoxx 50 futures -.29%

• S&P 500 futures -.17%.

• NASDAQ 100 futures -.23%.  

Morning Preview Links

BOTTOM LINE: Asian indices are mostly higher, boosted by industrial and financial shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed.  The Portfolio is 100% net long heading into the day.