Stocks Slightly Lower into Final Hour on Higher Long-Term Rates, Geopolitical Tensions, Year-End Positioning, Biotech/Alt Energy Sector Weakness

Economic/Market Gauges:

• North American Investment Grade CDS Index 50.0 -.9%
• Bloomberg US Securitized MBS/ABS/CMBS Avg. OAS .26 +2.0 basis points
• BofA Global Financial Stress Indicator -.29 +1.0 basis point
• European Financial Sector CDS Index 54.3 -.6%
• Emerging Market CDS Index 125.0 unch.
• Bloomberg Global Trade Policy Uncertainty Index 2.3 +.4

• Citi US Economic Surprise Index 8.3 +1.0 point

• Citi Eurozone Economic Surprise Index 32.5 unch.

• Citi Emerging Markets Economic Surprise Index 29.1 -3.3 points 
• S&P 500 Current Quarter EPS Growth Rate YoY(16 of 500 reporting) +32.8% unch.
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 310.26 +.10:  Growth Rate +15.2% unch., P/E 22.2 unch.
• S&P 500 Current Year Estimated Profit Margin 13.50% -2.0 basis points
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(0 of 10 reporting) +n/a +n/a
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 484.46 +.20: Growth Rate +17.9% unch., P/E 32.9 unch.
• Bloomberg US Financial Conditions Index .77 -4.0 basis points
• US Yield Curve 67.25 basis points (2s/10s) +2.25 basis points 
• Bloomberg Industrial Metal Index 164.6 +2.9% 
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 28.8% +.1 percentage point
• US Atlanta Fed GDPNow Q4 Forecast +3.0% unch. 
• US 10-Year T-Note Yield 4.13% +2.0 basis points
• 1-Year TIPS Spread 2.33 unch.

• Highest target rate probability for March 18th FOMC meeting: 48.0% (+.6 percentage point) chance of 3.5%-3.75%. Highest target rate probability for April 29th meeting: 46.0%(+.1 percentage point) chance of 3.25%-3.5%. (current target rate is 3.5-3.75%)
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -115 open in Japan 
• China A50 Futures: Indicating -46 open in China

• DAX Futures: Indicating +180 open in Germany

Portfolio:

• Slightly Higher: On gains in my utility/tech sector longs and index hedges
• Disclosed Trades: None
• Market Exposure: 75% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Growth -.4%

Sector Underperformers:

• 1) Biotech -.9% 2) Computer Services -.7% 3) Defense -.4%

Stocks Falling on Unusual Volume: 

• OCFC, FFIC, GLSI and CORT

Stocks With Unusual Put Option Activity:

• 1) ARCC 2) IEP 3) SLS 4) IBRX 5) CCIR

Stocks With Most Negative News Mentions:

• 1) RZLT 2) JYD 3) CDE 4) CPNG 5) KLAR

Sector ETFs With Most Negative Money Flow:

• 1) XLF 2) XBI 3) XLK 4) IBB 5) XRT

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth unch.

Sector Outperformers:

• 1) Gold & Silver +1.6% 2) Telecom +1.3% 3) Energy +.9%

Stocks Rising on Unusual Volume:

•  AFJK, AXTI, RARE, FTAI, ASTS, EH, SBSW, BIDU, XPEV, LUNR, HYMC, SDRL, ZETA and PSNY

Stocks With Unusual Call Option Activity:

• 1) AGNC 2) OSG 3) FEZ 4) UAMY 5) UAA 

Stocks With Most Positive News Mentions:

• 1) FTAI 2) FONR 3) ONTF 4) UAA 5) ACHV

Sector ETFs With Most Positive Money Flow:

• 1) SMH 2) PPH 3) PICK 4) PRN 5) SLVP

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:

• None of note

After the Close: 

• None of note

Economic Release 

8:30 am EST

• Initial Jobless Claims for last week is estimated to rise to 219K versus 214K the prior week.
• Continuing Claims is estimated to fall to 1905K versus 1923K prior. 

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -333,330 barrels versus a +405,000 barrel gain the prior week. Gasoline supplies is estimated to rise by +1,166,670 barrels versus a +2,862,000 barrel gain the prior week. Distillate inventories is estimated to rise by +2,000,000 barrels versus a +202,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to fall by -.6% versus a -.2% decline prior. 

Upcoming Splits

• None of note

Other Potential Market Movers

• The weekly MBA Mortgage Applications report, weekly CFTC speculative net positioning reports, weekly US Baker Hughes rig count and the weekly EIA natural gas inventory report 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 -42.1% Below 100-Day Average 
• Nasdaq/NYSE Volume Ratio 17.6 +3.7
• 6 Sectors Declining, 5 Sectors Rising
• 50.9% of Issues Advancing, 46.6% Declining 
• TRIN/Arms .64 -28.9%
• Non-Block Money Flow -$76.7M
  
• 38 New 52-Week Highs, 20 New Lows
• 62.2% (+.1%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 61.6 +.5

Polymarket:

• Supreme Court Rules in Favor of Trump's Tariffs? 31.0% unch.
• Will there be another US government shutdown by January 31st? 26.0% +1.0 percentage point
• Will China invade Taiwan by end of 2026? 13.0% unch.
• US-Venezuela military engagement by Jan. 31st 24.0% -16.0 percentage points

Other:

• Bloomberg Global Risk-On/Risk-Off Index 98.0 +.1%
• US High-Yield Tech Sector OAS Index 428.25 -1.0 basis point
• Bloomberg Cyclicals/Defensives Index 265.6 +.01%
• Morgan Stanley Growth vs Value Index 160.1 -.2%
• CNN Fear & Greed Index 50.0 (NEUTRAL) +3.0
• 1-Day Vix 7.5 -15.0%
  
• Vix 14.2 +.1%
  
• Total Put/Call .78 -10.3%

Tuesday Watch

Around X:

• @Business  

• President Donald Trump downplayed China’s latest maneuvers around the island of Taiwan, casting them as a continuation of longstanding military exercises. 
• China has kept its central bank on the sidelines of managing an economy hampered by weak demand and deep-seated imbalances, defying Wall Street forecasts for the biggest interest-rate cuts in a decade.
• President Trump expressed concern that Iran is moving to rebuild its nuclear capabilities after strikes by the US and Israel this year, and threatened to target the country again to prevent Tehran from stockpiling weapons.
• The Year Ahead in AI: Ads, IPOs and Moving Beyond LLMs.
• Get up to speed on what's moving global markets.
• Here's what you need to know to start your day.  

• @ZeroHedge

• China's CNOOC Discovers Massive Oilfield in Bohai Sea.
• According to Polymarket Walz isn't going anywhere.
• Regenerative Agriculture Finally Has A Seat At The Table At USDA.
• Fraud. Song: M1LLIONZ - LAGGA. (video)   
• *CNN: CIA STRUCK PORT FACILITY ON VENEZUELAN COAST. *CNN: CIA DRONE STRIKE OCCURRED EARLIER THIS MONTH. *CNN: STRIKE TARGETED DOCK BELIEVED TO BE USED BY TREN DE ARAGUA.
• Another example of staggering fraud in California: Fully one-third of community college applications are fake. They're just used for financial aid fraud. (video)
• "Quality Learing Center" First Domino To Fall As Somali-Linked Minneapolis Daycare Scandal Shocks Nation.
• Stunning - it appears they have taken down the license look-up website so Minnesotans can’t see who the Medicaid service providers are or what licensing violations they may have. @Tim_Walz @ DHS should restore this immediately.  
• The Pence Mirage: Why The Right Isn't Leaving Trump.
• Top Senate Races To Watch In 2026.
• Month-end pension rebal: "Heading into month and quarter-end, the desk's model estimates $13 billion of US equities to sell from US pensions given the moves in equities and bonds" - Goldman.
• In a group chat with a bunch of smart, successful liberals who still don't understand how elections get stolen. So I wanted to share. In simple terms, this is what happens: 1) Fill up the voter rolls with as many names as possible, including illegals, dead people, and residents who left the state. 2) Legislate for unsolicited ballots to be automatically mailed out. 3) Pay people (per ballot) to collect, fill out, sign, and send back or dump these ballots into drop boxes. Here's how this works:
• Precious Metals Puke, Bonds Bid As Stocks Give Up Santa's Gains. 

• @CNBC

• Tuesday's big stock stories: What’s likely to move the market in the next trading session.
• Asia-Pacific markets set to open mostly lower on penultimate day of the year.
• 'Still bullish on cybersecurity,' says Evercore's Peter Levine.
• 'We're in the middle of a big buildout of infrastructure around data centers,' says
  @SPGlobalRatings' Global Chief Economist Paul Gruenwald on AI data center boom and demand.
• 'AI trade isn't a bubble,' says @barbara_doran1, adding 'the Mag 7 should continue to compound nicely in 2026'.
• Stock futures are little changed after S&P 500 posts back-to-back losses: Live updates.

• @MarioNawful 

• MEET JODI HARPSTEAD: RAN MINNESOTA'S DAYCARE OVERSIGHT 2019-2024 - "THEY KNEW" ABOUT THE FRAUD. While Nick Shirley was finding $110 million in fraud in one day, one name keeps coming up: Jodi Harpstead. She ran the Minnesota Department of Human Services agency overseeing daycares from 2019-2024. The agency that licensed these facilities. Processed payments. Documented violations. And kept paying anyway. Video surfaced of Harpstead at a hearing:
• $18 BILLION GONE: MINNESOTA SOCIAL PROGRAMS LOOTED AT “INDUSTRIAL SCALE”. 6 more people have been charged in what’s turning into one of the most outrageous public fund heists in the U.S. “Not a handful of bad actors… industrial scale fraud,” said Joe Thompson, First Assistant U.S Attorney. Minnesota flagged 14 programs as “high risk,” costing taxpayers $18 billion since 2018. Feds say half or more of that may have gone straight into scammers’ pockets. (video)

• @ElonMusk

• It’s not just daycares… Somalis in Minnesota have been setting up fake medical centers and fraudulently diagnosing their children with autism to systematically steal billions of taxpayer dollars through Medicaid. Medicaid autism claims: 2018 - $3 million. 2023 - $399 million.
• Let me get this straight.. 1. Somali immigrants get billions in taxpayer dollars for *free* for fraudulent daycares. 2. in exchange, they fund democratic candidates with the free money. 3. democratic politicians (Walz, Omar, etc) ensure fraudulent payments continue. That is exactly what’s happening.

• @GenFlynn

• BREAKING: We The People demand ACCOUNTABILITY! Dear Mr. @POTUS, I know you are listening to We the People. This message is sent on behalf of a very frustrated 79 million Americans who voted for you and millions more who refuse to be ignored. Therefore, we are designating 2026 as THE YEAR OF ACCOUNTABILITY! Why now? Because the country is at a breaking point. Our freedoms are being chipped away in plain sight. Our government has grown bloated, arrogant, and unaccountable. Public trust has not merely declined; it has been obliterated. Power has been stripped from citizens and hoarded by bureaucrats, agencies, and unelected elites. Those who call themselves leaders protect each other while the American people pay the price. Civic duty has vanished from classrooms, replaced by obedience and ideology. The family, once the backbone of this nation, has been systematically weakened and devalued. Enough is Enough! At its core, this is not partisan. All Americans are demanding ACCOUNTABILITY. We the People reject the lies, the gaslighting, the censorship, and the deliberate erosion of our lived reality over the past decade. We remember what was done. We know who did it. We are no longer willing to move on without consequences. The message is unmistakable and unstoppable. Americans demand ACCOUNTABILITY. So Mr. @POTUS, the question for you to answer is simple. Will you stand with We The People or will you protect the system that failed us? Make 2026 the year of ACCOUNTABILITY. We will stand with you through thick and thin like we always have, but you must respect our wishes. If you don’t, as our founders warned, the deep state concentration of power in government will lead to greater corruption and eventual tyranny. And your legacy in history will be tarnished beyond repair. Respectfully, 1 of the 79 million voters.
• Breaking: Massive crimes against U.S. taxpayers! @MikeBenzCyber I find your reporting exceptional and fact based but why hasn’t anyone from USAID been indicted or at least subpoenaed for these many alleged crimes committed? @AGPamBondi this is a question for you? Why is the @CIA and its director @CIADirector not speaking out about any of this? You state the CIA is responsible for the outcomes of many national elections.

• @RenzTom

• Why is MAGA complaining about Pam Bondi? After nearly a year as Attorney General (sworn in early 2025), Bondi has failed epically to deliver on MAGA's key issue: accountability. She has delivered zero high-profile prosecutions—no major indictments, no perp walks—and statutes of limitations are ticking down on cases like J6 committee crimes (some expiring Jan. 6, 2026). We post and share to urge Trump to fire Bondi and hire someone capable of fulfilling campaign promises:

• @bennyjohnson

• Now that we're all aware that medical fraud is a multi-billion dollar industry in Minnesota, can we get some answers about Rep. Melissa Hortman's murder? Melissa Hortman is the only Democrat to vote against healthcare for illegals. She killed the bill. Hortman and her husband were murdered soon after this vote. (video) 

• @TheSCIF

• DOMINION Voting System's own VP EXPOSING their wireless capabilities and testimonies of the types of FRAUD that occurred in the 2020 Election. The glitch is the STEAL as election officials testify about Trump votes automatically turning into Biden votes through programming and remote access. The VP clarifies that Dominion's machines are 3G and 4G capable and data from the ICP can be sent via cellular modems. (video)

• @BrianEastwood_X

• With everything going on in Minnesota, it is all starting to make sense now: why two state lawmakers were targeted by an assassin. State Rep. Melissa Hortman (D) and her husband were killed. State Sen. John Hoffman (D) and his wife were shot but survived. The legislature in June passed a bill ending state-funded health coverage (MinnesotaCare) for undocumented adults. These two lawmakers were the only Democrats to vote with Republicans. If you ask me, Tim Walz, the assassin, these lawmakers, and all the Somali fraud, it’s all connected!

• @KariLake

• Traitor Tim Waltz must be tossed out of the Minnesota governor’s mansion immediately and prosecuted for crimes against the people of America. Remember, these weren’t just state tax dollars that were being fraudulently misused, these were federal tax dollars. Every single American taxpayer is a victim of Tim Walz’s corruption. (video)

• @mattbanswol

• Remember when the GOP gave Elon Musk and DOGE a standing ovation in front of the entire American people... ...and then only voted on one DOGE cut, never held anyone accountable, and spent the rest of the year posting about it? This performative bullshit has to stop. (video)

• @EricLDaugh

• JUST IN: Shocking footage is resurfacing catching Somalis dropping their kids off at a "DAYCARE" for a few seconds. Just to LEAVE with the child, letting the center take money from the taxpayer for a FULL DAY of care. The parents got kickbacks. UNREAL. (video)
• HOLY SMOKES. The man who was in Nick Shirley’s video has gone to 50 Somali “day cares” on his own and NOT ONE has children. “They average about $2.5 million a year!” “I go there in the morning, afternoon and night — no kids there EVER.” RAID THEM ALL! (video)
• THIS MINNESOTA JUDGE, Sarah West, threw out a $7 MILLION dollar unanimous Somali fraud conviction. The jury was unanimous. Somali man Abdifatah Yusuf got off totally free after he stole millions in Medicaid dollars. Absolutely infuriating. Not only do Minnesota Democrats ignore and allow the fraud to happen - but once it's PROVEN, they throw the case out.

• @WallStreetApes

• WOW!! MSNBC is broadcasting to all of America that the Somalian fraud in Minnesota is made up by Donald Trump. MSNBC is actually saying the FBI and DOJ are lying about the fraud. The mainstream media is organized crime against the United States and should be prosecuted. (video)

• @WarClandestine

• Everything revolves around the Dems cheating in elections. They want the border open so they can import illegals, and they want elections insecure so they can let the illegals vote. They don’t want ICE/US MIL in their cities, because they don’t want their illegal voters to be deported. They opposed the One Big Beautiful Bill because it funds ICE/US MIL, and they know Trump is going to invoke the Insurrection Act to deploy troops to their cities to assist ICE in deporting the illegals. If the Dems can’t cheat in elections, they lose access to our tax dollars, and thus they lose all their power.

• @WallStreetMav

• Republican Rep Tom Emmer, the 3rd most powerful member in leadership for the Congress for House Republicans ... he basically told his constituents to be quiet about all of the Somalis being brought into St Cloud Minnesota. Tom Emmer is part of the problem.

Night Trading 

• Asian equity indices are -.25% to +.25% on average. 
• Asia Ex-Japan Investment Grade CDS Index 64.75 +.25 basis point.
• China Sovereign CDS 43.25 -.5 basis point.
• China Iron Ore Spot 105.5 USD/Metric Tonne -.3%. 
• Swiss Franc/Offshore Chinese Renminbi Cross 8.88 +.08%.
• Bloomberg Emerging Markets Currency Index 36.1 +.01%.
• Bloomberg Global Risk-On/Risk Off Index 98.3 +.4%.
• US 10-Year Yield 4.11% unch.
• Japan 30-Year Yield 3.42% -1.0 basis point. 
• Volatility Index(VIX) futures 16.8 -.%.
• Euro Stoxx 50 futures n/a. 
• S&P 500 futures -.01%.
• NASDAQ 100 futures -.04%.

Morning Preview Links

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