Stocks Reversing Modestly Higher into Afternoon on Less Hawkish Fed Hopes, Lower Long-Term Rates, Technical Buying, Biotech/Airline Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Around Even
  

• Sector Performance:  Mixed
  

• Volume:  Below Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 19.9 +2.4%
• DJIA Intraday % Swing 1.1% +26.9%
  
• Bloomberg Global Risk On/Risk Off Index 3,693.0 -141.0 points

• Euro/Yen Carry Return Index 139.44 -1.1%

• Emerging Markets Currency Volatility(VXY) 11.7 +2.8%

• CBOE S&P 500 Implied Correlation Index 41.0 -1.8% 

• ISE Sentiment Index 107.0 -11.0 points
  

• Total Put/Call .90 -5.3%

• NYSE Arms 1.33 +121.6%

Credit Investor Angst:

• North American Investment Grade CDS Index 73.66 -.6%
  

• US Energy High-Yield OAS 388.81 +1.69%
• Bloomberg TRACE # Distressed Bonds Traded 319.0 -15.0
  

• European Financial Sector CDS Index 99.97 +.78%

• Italian/German 10Y Yld Spread 208.0 basis points unch.
  

• Asia Ex-Japan Investment Grade CDS Index 137.07 -1.7%
  

• Emerging Market CDS Index 285.75 +2.0%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 26.4 unch.
  
• Ukraine Sovereign Debt Credit Default Swap 8,669.54 -13.7%
  

• 2-Year Swap Spread 30.25 basis points unch.
  

• TED Spread 40.5 basis points +3.25 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -18.75 basis points unch.
  
• MBS  5/10 Treasury Spread  115.0 +2.0 basis points
  
• iShares CMBS ETF 48.51 +.41%
• Avg. Auto ABS OAS .99 +1.0 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 49.50 -.51%
• 3-Month T-Bill Yield 2.56% +1.0 basis point
  

• Yield Curve -41.75 basis points (2s/10s) -2.0 basis points
  

• China Iron Ore Spot 106.45 USD/Metric Tonne --2.3%

• Citi US Economic Surprise Index -34.1 -8.9 points

• Citi Eurozone Economic Surprise Index -48.3 -.5 point
  

• Citi Emerging Markets Economic Surprise Index 33.6 -3.7 points
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 236.42 +.03:  Growth Rate +15.4% unch., P/E 18.2 +.2 point
  
• US Atlanta Fed GDPNow Q3 Forecast +2.45% unch.
• Bloomberg US Financial Conditions Index -.20 -10.0 basis points
  

• 10-Year TIPS Spread 2.44 -4.0 basis points
  
• Highest target rate probability for November 2nd FOMC meeting: 49.8%(-.1 percentage point) chance of 3.25%-3.5%. Highest target rate probability for December 14th meeting: 44.1%(-1.7 percentage points) chance of 3.50%-3.75%.
  

US Covid-19:

• 217 new infections/100K people(last 7 days total). 12.5%(-.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 -75.0%(-2.7 percentage points) from peak 7-day avg. of 1/9/22 - 1/15/22
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -32 open in Japan 
• China A50 Futures: Indicating +2 open in China

• DAX Futures: Indicating +19 open in Germany

Portfolio:

• Higher:  On gains in my medical/tech/utility sector longs and emerging market shorts
  

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

• Market Exposure:  Moved to 75% net long