Stocks Slightly Lower into Final Hour on US Policy-Induced Stagflation Fears, Rising European/Emerging Markets/US High-Yield Debt Angst, Technical Selling, Tech/Alt Energy Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Mixed
  

• Volume:  Below Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 25.7 +.5%
• DJIA Intraday % Swing .7% -71.4%
  
• Bloomberg Global Risk On/Risk Off Index 42.5 +3.1%

• Euro/Yen Carry Return Index 142.97 +1.37%

• Emerging Markets Currency Volatility(VXY) 11.8 +1.9%

• CBOE S&P 500 Implied Correlation Index 44.9 -.8% 

• ISE Sentiment Index 96.0 +6.0 points
  

• Total Put/Call 1.24 +15.9%

• NYSE Arms .67 -63.1%

Credit Investor Angst:

• North American Investment Grade CDS Index 87.94 +3.1%
  

• US Energy High-Yield OAS 404.77 +1.4%
• Bloomberg TRACE # Distressed Bonds Traded 350.0 -1.0
  

• European Financial Sector CDS Index 119.95 -.08%

• Italian/German 10Y Yld Spread 230.0 basis points -1.0 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 137.46 +5.0%
  

• Emerging Market CDS Index 326.02 +2.4%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 26.72 -.15%

• 2-Year Swap Spread 34.5 basis points +.75 basis point
  

• TED Spread 25.25 basis points +1.0 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -14.25 basis points +.5 basis point
  
• MBS  5/10 Treasury Spread  137.0 +2.0 basis points
  
• iShares CMBS ETF 47.62 -.67%
• Avg. Auto ABS OAS .81-2.0 basis points
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 48.84 -.01%
• 3-Month T-Bill Yield 2.86% +7.0 basis points
  

• Yield Curve -31.0 basis points (2s/10s) +6.75 basis points
  

• China Iron Ore Spot 101.7 USD/Metric Tonne -2.7%
• Dutch TTF Nat Gas(European benchmark) 282.0 euros/megawatt-hour -16.9%

• Citi US Economic Surprise Index -23.3 +1.0 point

• Citi Eurozone Economic Surprise Index -32.3 +.4 point
  

• Citi Emerging Markets Economic Surprise Index 19.3 -3.1 points
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 236.93 +.26:  Growth Rate +15.8% +.1 percentage point, P/E 17.1 -.3 point
  
• Bloomberg US Financial Conditions Index -.39 -13.0 basis points
  
• US Atlanta Fed GDPNow Forecast +1.57% unch.
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +4.62% unch.: CPI YoY +8.28% unch.
  
• 10-Year TIPS Spread 2.57 -2.0 basis points
  
• Highest target rate probability for November 2nd FOMC meeting: 61.5%(+13.9 percentage points) chance of 3.5%-3.75%. Highest target rate probability for December 14th meeting: 58.7%(+17.8 percentage points) chance of 3.75%-4.0%.
  

US Covid-19:

• 182 new infections/100K people(last 7 days total). 10.5%(-.4 percentage point) of 1/14/22 peak(1,740) -7/100K people from prior report.
  
• New Covid-19 patient hospital admissions per 100K population -77.2%(-1.9 percentage point) from peak 7-day avg. of 1/9/22 - 1/15/22
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +217 open in Japan 
• China A50 Futures: Indicating +1 open in China

• DAX Futures: Indicating +29 open in Germany

Portfolio:

• Higher:  On gains in my commodity/industrial sector longs, index hedges and emerging market shorts
  

• Disclosed Trades:  Covered some of my (IWM)/(QQQ) hedges and some of my emerging market shorts
  

• Market Exposure:  Moved to 50% Net Long