Stocks Rising into Final Hour on Lower Long-Term Rates, AI Infrastructure Build-Out Optimism, US/Iran Tension De-Escalation, Tech/Commodity Sector Strength

Economic/Market Gauges:

• North American Investment Grade CDS Index 49.8 -1.2%
• Bloomberg US Securitized MBS/ABS/CMBS Avg. OAS .19 -1.0 basis point
• BofA Global Financial Stress Indicator -.05 +4.0 basis points
• European Financial Sector CDS Index 53.0 -1.1%
• Emerging Market CDS Index 124.6 -1.4%
• Bloomberg Global Trade Policy Uncertainty Index 1.9 -.1

• Citi US Economic Surprise Index 38.7 +.7 point

• Citi Eurozone Economic Surprise Index 26.6 -1.3 points

• Citi Emerging Markets Economic Surprise Index 33.1 +4.1 points 
• S&P 500 Current Quarter EPS Growth Rate YoY(295 of 500 reporting) +8.3% -6.1 percentage points
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 317.58 +.39:  Growth Rate +18.0% +.2 percentage point, P/E 22.0 +.5
• S&P 500 Current Year Estimated Profit Margin 12.58% -13.0 basis points
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(7 of 10 reporting) +19.1% -2.3 percentage points
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 500.85 +1.57: Growth Rate +21.9% +.4 percentage point, P/E 29.8 +.6
• Bloomberg US Financial Conditions Index .76 +2.0 basis points
• US Yield Curve 71.0 basis points (2s/10s) -2.0 basis points 
• Bloomberg Industrial Metal Index 170.79 +1.2% 
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 27.7% +.5 percentage point
• US Atlanta Fed GDPNow Q4 Forecast +4.2% unch.
• US 10-Year T-Note Yield 4.20% unch.
• 1-Year TIPS Spread 3.41 +8.0 basis points

• Highest target rate probability for April 29th FOMC meeting: 63.5% (-2.9 percentage points) chance of 3.5%-3.75%. Highest target rate probability for June 17th meeting: 50.3%(-.8 percentage point) chance of 3.25%-3.5%. (current target rate is 3.5-3.75%)
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +920 open in Japan 
• China A50 Futures: Indicating +45 open in China

• DAX Futures: Indicating +103 open in Germany

Portfolio:

• Higher: On gains in my tech/industrial/financial sector longs
• Disclosed Trades: None
• Market Exposure: 100% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Value +.2%

Sector Underperformers:

• 1) Insurance -3.6% 2) Computer Services -1.5% 3) Healthcare Providers -.9%

Stocks Falling on Unusual Volume: 

• BNTC, BKNG, EXE, EPC, NWG, WDAY, DXC, ELF, AON, CBZ, WAT, CLF, HIMS, MNDY, PGY and KD

Stocks With Unusual Put Option Activity:

• 1) XLC 2) RIG 3) EXE 4) FISV 5) FND

Stocks With Most Negative News Mentions:

• 1) CLF 2) HIMS 3) KD 4) HAIN 5) WDAY

Sector ETFs With Most Negative Money Flow:

• 1) XLY 2) XLK 3) XLU 4) ITB 5) XOP

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +1.3%

Sector Outperformers:

• 1) Gold & Silver +5.2% 2) Networking +4.5% 3) Nuclear +4.3%

Stocks Rising on Unusual Volume:

• VAL, SUPX, GOLD, AXTI, BLSH, WULF, APP, CIFR, LUNR, VRNS, RBLX, U, ORCL, IREN, XMTR, PLSE, CRDO, AAOI, OUST, STM, ALAB, PSLV, IAG, APLD, NXST, CORZ, LPTH, DT, TGNA, WGS, CIEN, FROG, AUGO, SCZM, AGI, ICHR, SBGI, PWP, NGD, TSEM, RBRK, CDE, ATEN, SHOP, COHR, SIMO, SBH, LASR, HTFL, ESE, GLW, CALX, GLXY, HOOD, PLTR, ASX, CEF, VNET, CTGO, GOOS, OTF, VTRS, VNET, CGAU, ATAT, AS, UCTT, VRT, SDRL, STVN, TTWO, LITE, IOT, KKR, CPNG, CMCL, AMKR, NVO, CYBR, COCN, WBI, PANW, SVM, CLBT, CGNX, PEGA, ROIV, AXON, CMI, IIIV, KR, FUTU, SNOW, INTA, SNEX, SKY, OSW, PAX, ERO, VALE, SNEX, KVYO, MSFT, WPM, DAVE, NVDA, SAP, NTGR,  

Stocks With Unusual Call Option Activity:

• 1) RUM 2) UPWK 3) SCCO 4) IEF 5) VZLA 

Stocks With Most Positive News Mentions:

• 1) APP 2) NXST 3) IMPP 4) OUST 5) VSAT

Sector ETFs With Most Positive Money Flow:

• 1) SMH 2) IGV 3) XLF 4) XBI 5) XLI

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:

• (AZN)/2.11
• (KO)/.56
• (DDOG)/.55
• (DUK)/1.49
• (DD)/.43
• (RACE)/2.46
• (FISV)/1.90
• (HOG)/-1.07
• (HAS)/.96
• (INCY)/1.90
• (MAR)/2.60
• (MAS)/.79
• (DGX)/2.36
• (SAIA)/1.90
• (SPOT)/2.74
• (ZBH)/2.40 

After the Close: 

• (AEIS)/1.78
• (AIG)/1.90
• (ALAB)/.52
• (LEU)/1.41
• (NET)/.27
• (EW)/.62
• (F)/.18
• (FRSH)/.11
• (GILD)/1.81
• (HNGE)/.41
• (LYFT)/.12
• (MAT)/.54
• (MIR)/.16
• (PEGA)/.73 
• (RRR)/.49
• (HOOD)/.63
• (UPST)/.46
• (ZG)/.40 

Economic Release 

6:00 am EST

• The NFIB Small Business Optimism Index for Jan. is estimated to rise to 99.8 versus 99.5 in Dec.  

8:30 am EST

• The Import Price Index MoM for Dec. is estimated to rise +.1% versus unch. in Nov.
• The Import Price Index Ex Petrol MoM for Dec. is estimated to rise +.2% versus a +.2% gain in Nov.
• The Export Price Index MoM for Dec. is estimated to rise +.1%.
• The Employment Cost Index for 4Q is estimated to rise +.8% versus a +.8% gain in 3Q.
• Retail Sales Advance MoM for Dec. is estimated to rise +.4% versus a +.4% gain in Nov.
• Retail Sales Ex Autos MoM for Dec. is estimated to rise +.4% versus a +.5% gain in Nov.
• Retail Sales Ex Autos and Gas for Dec. is estimated to rise +.4% versus a +.4% gain in Nov.

10:00 am EST

• Business Inventories for Nov. is estimated to rise +.2% versus a +.3% gain in Oct. 

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Logan speaking, Fed's Hammack speaking, Atlanta Fed GDPNow Q4 update, 3Y T-Note auction, weekly US retail sales reports, CB Employment Trends Index for Jan., EIA short-term energy outlook, API weekly crude oil stock report, ADP weekly employment change, TD Cowen Aerospace/Defense Conference, BofA Financials conference, (PCAR) analyst day, (ROK) annual meeting and the Stifel Transport/Logistics 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 +9.4% Above 100-Day Average 
• Nasdaq/NYSE Volume Ratio 11.0 +1.6
• 3 Sectors Declining, 8 Sectors Rising
• 57.5% of Issues Advancing, 40.5% Declining 
• TRIN/Arms 1.24 +25.3%
• Non-Block Money Flow -$107.3M
  
• 265 New 52-Week Highs, 56 New Lows
• 69.0% (+.02%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 67.1 +2.1

Polymarket:

• Supreme Court Rules in Favor of Trump's Tariffs? 28.0% -3.0 percentage points
• Another US government shutdown by February 14th? 76.0% +9.0 percentage points 
• Will China invade Taiwan by end of 2026? 12.0% unch.
• US strikes Iran by June 30th 56.0% +6.0 percentage points 

Other:

• Bloomberg Global Risk-On/Risk-Off Index 106.3 +3.0%
• US High-Yield Tech Sector OAS Index 479.25 +13.25 basis points
• Bloomberg Cyclicals/Defensives Index 259.8 +.6%
• Morgan Stanley Growth vs Value Index 138.7 +1.6%
• CNN Fear & Greed Index 35.0 (moved to NEUTRAL from FEAR) +4.0
• 1-Day Vix 9.6 -36.3%
  
• Vix 17.1 -3.7%
  
• Total Put/Call .73 -15.1%

Monday Watch

Around X:

• @Business   

• Iran’s President Masoud Pezeshkian described the Friday nuclear talks with Washington as “a step forward,” even as he pushed back against any attempts at intimidation. 
• Japan’s top currency official said the government remains on high alert as it monitors the foreign exchange market following Prime Minister Sanae Takaichi’s historic victory in Sunday’s snap election.
• Italy faced widespread rail disruption on first day of the Winter Olympics, with the country’s transport minister saying it was an attack on the nation.
• Samsung’s shares climbed as much as 6.4% after a report that the company will soon begin mass production of HBM4 memory chips, used as part of the buildout for artificial intelligence infrastructure.
• YouTube is about to start selling cheaper TV bundles for sports fans and news junkies. The sports-only bundle will cost $65 a month – a 22% discount from regular YouTube TV. 
• Keir Starmer’s future is the balance after a crisis over the appointment of Peter Mandelson as ambassador to Washington claimed the UK prime minister’s closest aide.
• House Minority Leader Hakeem Jeffries said Democrats are insisting on their full list of demands to reform ICE before agreeing to funding for the Department of Homeland Security.  
• Apple is preparing to kick off its 2026 product blitz with an iPhone 17e, new iPads, Macs and more, @markgurman writes in this week’s Power On. 
• Get up to speed on what's moving global markets. 
• Here's what you need to know to start your day. 

• @Zerohedge

• *JAPAN'S NIKKEI INDEX RISES 5.1% TO 56,999.60. 
• Khanna letter to Comer ahead of virtual Maxwell deposition tomorrow: Dear Chairman Comer, It is my understanding that Ms. Ghislaine Maxwell intends to invoke her Fifth Amendment privilege against self-incrimination and decline to answer all substantive questions at her upcoming deposition before the House Oversight Committee. This position appears inconsistent with Ms. Maxwell’s prior conduct, as she did not invoke the Fifth Amendment when she previously met with Deputy Attorney General Todd Blanche to discuss substantially similar subject matter. I understand that Ms. Maxwell intends to assert this privilege on a “blanket basis” by reading a prepared statement at the outset of the deposition and refusing to permit Members to question her individually through counsel, rather than invoking the privilege on a question-by-question basis. 
• Trump Lifts Biden-Era Restrictions On Commercial Fishing In Atlantic Marine Monument.
• Morgan Stanley: Most Indicators Linked To Global Growth Are Moving "Up And To The Right".
• America's Record Health Spending Explained In 5 Charts.
• ICE Urges Newsom Not To Release 33,179 Criminal Illegal Immigrants Into Communities.
• There is nothing more hated in the market, than Software. (graph)
• Net exposure:    
• NIH Allocates $10 Million For Research In East Palestine Three Years After Toxic Train Crash.
• Sell (Or Buy) America? Goldman Traders Lay Out The Best Trades Across FX, Rates, & Commodities.
• ICYMI: last week saw the biggest shorting on record, according to Goldman Prime Brokerage. The bank also correctly called Friday's bounce in Software and most shorted names which have started a major covering squeeze.   
• US tech stocks have already seen a significant de-rating, with forward PEG ratios now trading near 5-year lows.
• David Sacks Exposes New York Times For Shielding Reid Hoffman In Epstein Files.
• Nearly 2,000 Truckers Deemed Unfit Are Removed From American Roads.
• Pentagon To Cut Academic Ties With Harvard, Hegseth Says.
• Humanoid Robots Get "Brains" As Dual-Use Fears Mount.

• @CNBC

• CNBC Daily Open: Watch Japan's yen and government bond yields as Takaichi storms to an election victory. 
• Japan stocks set to soar after Takaichi secures historic mandate.
• Stock futures tick higher as Wall Street awaits closely watched jobs, inflation reports: Live updates.
• Hong Kong media baron and pro-democracy activist Jimmy Lai sentenced to 20 years in prison. 
• Federal judge orders Fulton County Georgia election case documents unsealed by Tuesday.
• Hims & Hers pulls copycat weight-loss pill after threats of legal action.

• @Barron's 

• Had bullish commentary on (CAT) and (OKTA).

• @TheTranscript

• Another great earnings week. (table)

• @GuntherEagleman

• Pass the SAVE AMERICA ACT or nothing else matters.

• @911NewsBreaks

• BREAKING: Trump DEMANDS congress pass the Save America Act. "America’s Elections are Rigged, Stolen, and a Laughingstock all over the World. We are either going to fix them, or we won’t have a Country any longer." (video)

Night Trading

• Asian indices are +1.25% to +3.0% on average.
• Asia Ex-Japan Investment Grade CDS Index 65.0 -2.5 basis points.
• China Sovereign CDS 42.75 -1.75 basis points.
• China Iron Ore Spot 99.6 USD/Metric Tonne +.6%.
• Gold 5,039.4 USD/t oz. +1.2% 
• Swiss Franc/Offshore Chinese Renminbi Cross 8.93 -.01%. 
  
• Bloomberg Emerging Markets Currency Index 36.26 -.07%.
• Bloomberg Global Risk-On/Risk Off Index 102.5 +1.8%.
• US 10-Year Yield 4.22% +1.0 basis point. 
• Japan 30-Year Yield 3.56% -1.0 basis point. 
• Volatility Index(VIX) futures 19.2 -2.7%. 
• Euro Stoxx 50 futures +.28%.
• S&P 500 futures +.12%.
• NASDAQ 100 futures +.24%.

Morning Preview Links

BOTTOM LINE: Asian indices are higher, boosted by industrial and technology shares in the region. I expect US stocks to open modestly higher and to maintain gains into the afternoon. The Portfolio is 100% net long heading into the week.