Stocks Finish Slightly Higher on Earnings Outlook Optimism, Short-Covering, Technical Buying, Energy/Utility Sector Strength

Economic Gauges:

• S&P 500 Current Quarter EPS Growth Rate YoY(416 of 500 reporting) +4.8% -.1 percentage point
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 246.28 +.12:  Growth Rate +11.2% unch., P/E 20.2 unch.
  
• S&P 500 Current Year Estimated Profit Margin 11.18% -2.0 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 308.54 +.45: Growth Rate +44.6% +.2 percentage point, P/E 30.9 -.1
  
• Bloomberg US Financial Conditions Index 1.0 -11.0 basis points
  
• Bloomberg Euro-Zone Financial Conditions Index .38 -7.0 basis points
  
• US Yield Curve -34.5 basis points (2s/10s) -.75 basis point
  
• US Atlanta Fed 1Q GDPNow Forecast +2.9% unch.
  
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 562% +2.4 percentage points
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +2.74% unch.: CPI YoY +3.11% +5.0 basis points
  
• 10-Year TIPS Spread 2.35 +3.0 basis points
  
• Highest target rate probability for May 1st FOMC meeting: 69.2%(+3.7 percentage points) chance of 5.25%-5.5%. Highest target rate probability for June 12th meeting: 53.2%(-.7 percentage point) chance of 5.0%-5.25%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +78 open in Japan 
• China A50 Futures: Indicating -12 open in China

• DAX Futures: Indicating +63 open in Germany

Portfolio:

• Slightly Lower:  On losses in my tech sector longs

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

• Market Exposure: Moved to 75% Net Long
  

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

Earnings of Note 
Company/Estimate 

Before the Open:

• (CARS)/.41
• (D)/.38
• (FCN)/1.67
• (HEES)/1.22
• (IRM)/1.05
• (KDP)/.54
• (MRNA)/-.99
• (NEM)/.43
• (PCG)/.46
• (PXD)/5.35
• (POOL)/1.27
• (PWR)/1.98
• (TNK)/3.42
• (TRN)/.64
• (W)/-.15
  

After the Close: 

• (SQ)/.58
• (BKNG)/29.72
• (CVNA)/-.84
• (CPRT)/.34
• (EIX)/1.16
• (EOG)/3.08
• (INTU)/2.30
• (MELI)/7.10
• (NE)/.59
• (OII)/.25
• (RMAX)/.29
• (SFM)/.45
• (OLED)/1.15
  

Economic Releases

8:30 am EST

• The Chicago Fed National Activity Index for Jan. is estimated to fall to -.21 versus -.15 in Dec.
• Initial Jobless Claims are estimated to rise to 216K versus 212K the prior week.
• Continuing Claims are estimated to fall to 1884K versus 1895K prior.
  

9:45 am EST

• S&P Global US Manufacturing PMI for February is estimated at 50.7 versus 50.7 in January.
• S&P Global US Services PMI for February is estimated to fall to 52.3 versus 52.5 in January.
• S&P Global US Composite PMI for February is estimated to fall to 51.8 versus 52.0 in January. 
  

10:00 am EST

• Existing Home Sales for Jan. is estimated to rise to 3.97M versus 3.78M in Dec.
  

Upcoming Splits 

• (WMT) 3-for-1
  

Other Potential Market Movers

• The Fed's Kashkari speaking, Fed's Harker speaking, weekly EIA natural gas inventory report, BofA Financial Services Conference, (SON) investor day, (RJF) annual meeting, (AMGN) business update, Barclays Industrial Select Conference and the Citi Industrial Tech/Mobility Conference could also impact global trading tomorrow.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Wednesday Watch

X:

• @TomFitton - Biden has turned the entire federal government into a leftist voter-turnout operation.
• @ShadowofEzra - FOX23 is conducting an investigation with a family who believes that the Covid-19 vaccine led to the death of their daughter. According to the family, all of her organs shut down, and her heart was swollen. The mainstream media is also now reporting on a recent study that confirms adverse reactions from COVID-19 vaccines, affecting over 100 million vaccinated individuals and including associations with myocarditis and Guillain-Barré syndrome. (video)
• @AnthonySabatini - HUGE SWAMP ACTION ALERT. A Bill JUST filed in the Florida House today would re-institute “run-off” elections, making the top 2 candidates run in a 2nd primary election. Why is this important & devastating for conservatives? Because moderate / establishment RINOs & their consultants are pushing to eliminate any and all grassroots / conservative candidates in a 2nd primary, where they can drown them in a 2nd barrage of super PAC attack ads.
• @TimRunsHisMouth - If you're a mass shooter at a Kansas City Chiefs parade, the media protects your identity because you're "under 18." If you're a fan in face paint at a Kansas City Chiefs game, the media tries to ruin your life, calling you a racist at 9 years old. (pic)
• @BGatesIsaPsycho - Plane fitted with DEW “Can destroy a target 60miles away” Truth is stranger than fiction. (video)
• @ClownWorld_ - This is Kelly Wong, a non-citizen who cannot legally vote in the USA, yet was recently elected to San Francisco’s Elections Commission. This was her victory speech. (video)
• @charliekirk11 - Fox News' @BillMelugin_ reports on how the illegal invasion has shifted to California and includes a massive surge of Chinese nationals: "I can speak Spanish, but it's not doing me a whole lot of good. We're getting a massive explosion of Chinese nationals crossing the border." (video)
• @WallStreetApes - I Think We Just Figured Out How New York Is Planning On Paying For All Their Illegal Immigrants. This Man Got His New Tax Assessments & Costs Are Increasing On ALL Businesses & Properties, Some Up 75% From Previous Year!! (video)
• @VigilantFox - MUST WATCH: Mike Benz makes damning case that the RIG was in for the 2020 election SEVEN MONTHS ahead of time. How they did it was truly evil. (video)
• @Stillgray - The migrant crisis is completely out of control and it’s endangering the lives of police officers now. (video)
  

Night Trading 

• Asian equity indices are -.5% to unch. on average.

• Asia Ex-Japan Investment Grade CDS Index 99.5 -1.25 basis points.

• China Sovereign CDS 65.5 +1.0 basis point.
  
• China Iron Ore Spot 119.7 USD/Metric Tonne -.9%.

• Bloomberg Emerging Markets Currency Index 40.3 -.1%.
• Bloomberg Global Risk-On/Risk Off Index 71.6 +.5%.
• Volatility Index(VIX) futures 15.6 +.2%.
• Euro Stoxx 50 futures -.06%

• S&P 500 futures -.17%.

• NASDAQ 100 futures -.32%.  

Morning Preview Links

BOTTOM LINE: Asian indices are modestly lower, weighed down by industrial 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 50% net long heading into the day.

Stocks Lower into Close on US Policy-Induced Stagflation Fears, Earnings Outlook Jitters, Technical Selling, Gambling/Alt Energy Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 15.6 +5.7%
• DJIA Intraday % Swing .53 +.9%
  
• Bloomberg Global Risk On/Risk Off Index 71.0 -2.3%

• Euro/Yen Carry Return Index 175.3 +.2%

• Emerging Markets Currency Volatility(VXY) 6.4 -1.8%

• CBOE S&P 500 Implied Correlation Index 18.6 +9.6% 

• ISE Sentiment Index 133.0 +11.0
  

• Total Put/Call .94 -11.3%

• NYSE Arms 1.26 +26.0% 
• NYSE Non-Block Money Flow -$247.3M 
  

Credit Investor Angst:

• North American Investment Grade CDS Index 53.0 +.06%
  

• US Energy High-Yield OAS 305.1 +.9%
• Bloomberg TRACE # Distressed Bonds Traded 271 -23
  

• European Financial Sector CDS Index 66.88 +.97% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 211.4 +.9%
  

• Italian/German 10Y Yld Spread 149.0 basis points +1.0 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 98.9 -.44%
  

• Emerging Market CDS Index 178.6 +.57%
• Israel Sovereign CDS 113.9 -1.2%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 24.6 +.14%

• 2-Year SOFR Swap Spread -12.75 basis points +.75 basis point
  

• Treasury Repo 3M T-Bill Spread 6.25 basis points -1.25 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -5.25 -.5 basis point
  
• MBS  5/10 Treasury Spread 157.0 -2.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 834.0 +1.0 basis point
  
• Avg. Auto ABS OAS 65.0 -1.0 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 40.3 +.01%
• 3-Month T-Bill Yield 5.36% -1.0 basis point
  

• China Iron Ore Spot 119.6 USD/Metric Tonne -1.0%
• Dutch TTF Nat Gas(European benchmark) 24.2 euros/megawatt-hour +2.0%

• Citi US Economic Surprise Index 40.3 -.1 point

• Citi Eurozone Economic Surprise Index 34.3 -.4

• Citi Emerging Markets Economic Surprise Index -2.5 -.4 point
• S&P 500 Current Quarter EPS Growth Rate YoY(402 of 500 reporting) +4.9% -.1 percentage point
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 246.16 +.35:  Growth Rate +11.2% +.2 percentage point, P/E 20.2 -.3
  
• S&P 500 Current Year Estimated Profit Margin 11.20% 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 308.09 +2.15: Growth Rate +44.4% +.5 percentage point, P/E 31.0 -1.2
  
• Bloomberg US Financial Conditions Index 1.11 +3.0 basis points
  
• Bloomberg Euro-Zone Financial Conditions Index .45 -44.0 basis points
  
• US Yield Curve -33.75 basis points (2s/10s) +2.25 basis points
  
• US Atlanta Fed 1Q GDPNow Forecast +2.9% unch.
  
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 53.8% -.5 percentage point
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +2.74% unch.: CPI YoY +3.06% unch.
  
• 10-Year TIPS Spread 2.32 -1.0 basis point
  
• Highest target rate probability for May 1st FOMC meeting: 62.0%(-7.7 percentage points) chance of 5.25%-5.5%. Highest target rate probability for June 12th meeting: 51.2%(-4.1 percentage points) chance of 5.0%-5.25%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -73 open in Japan 
• China A50 Futures: Indicating -29 open in China

• DAX Futures: Indicating +53 open in Germany

Portfolio:

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

• Disclosed Trades: Added to my (IWM)/(QQQ) hedges
  

• Market Exposure: Moved to 50% Net Long
  

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

Earnings of Note 
Company/Estimate 

Before the Open:

• (ADI)/1.71
• (CNQ)/1.61
• (EXC)/.58
• (GRMN)/1.40
• (RGEN)/.33
• (UTHR)/4.28
• (WING)/.57
• (WWW)/-.27

After the Close: 

• (CAKE)/.73
• (EXAS)/-.43
• (JACK)/1.96
• (JXN)/3.47
• (MRO)/.63
• (MOS)/.87
• (NVDA)/4.59
• (RIVN)/-1.35
• (RGR)/.67
• (SNPS)/3.43
• (VMI)/3.05
• (APA)/1.33
• (VIPS)/5.03
  

Economic Releases

2:00 pm EST

• Jan. 31 FOMC Meeting Minutes.  
  

Upcoming Splits 

• (WMT) 3-for-1
  

Other Potential Market Movers

• The Fed's Bostic speaking, Fed's Bowman speaking, 20Y T-Bond Auction, weekly US retail sales reports, API weekly crude oil stock report, BofA Financial Services Conference, Citi Industrial Tech/Mobility Conference and the Barclays Industrial Select Conference could also impact global trading tomorrow.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Afternoon Market Internals

NYSE Composite Index:

• Volume Running -.4% Below 100-Day Average 
• Nasdaq/NYSE Volume Ratio 10.0 +.8
  
• 9 Sectors Declining, 2 Sectors Rising
• 41.2% of Issues Advancing, 57.2% Declining 
• TRIN/Arms 1.3 +26.0%
  
• Non-Block Money Flow +$39.8M
  
• 93 New 52-Week Highs, 20 New Lows
• 59.3% (-3.0%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 62.0 -5.0
  

Other:

• Bloomberg Global Risk-On/Risk-Off Index 71.0 -2.2%
• Bloomberg Cyclicals/Defensives Pair Index 138.2 -.7%
  
• Russell 1000: Growth/Value 19,050.0 -1.4%
• CNN Fear & Greed Index 67.0 (Greed) -10.0
• 1-Day Vix 11.0 -16.6%
  
• Vix 15.6 +6.2%
  
• Total Put/Call .93 -12.3%