Stocks Slightly Lower into Final Hour on Escalating China Tensions, US Policy-Induced Stagflation Fears, US High-Yield Debt Angst, Energy/Biotech Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance:  Most Sectors Declining
  

• Volume:  Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 23.2 +8.8%
• DJIA Intraday % Swing 1.0% -5.1%
  
• Bloomberg Global Risk On/Risk Off Index 3,328.0 -144.0 points

• Euro/Yen Carry Return Index 139.27 -.68%

• Emerging Markets Currency Volatility(VXY) 12.3 +2.3%

• CBOE S&P 500 Implied Correlation Index 44.8 +3.3% 

• ISE Sentiment Index 105.0 +29.0 points
  

• Total Put/Call 1.01 +4.1%

• NYSE Arms 1.53 +37.8%

Credit Investor Angst:

• North American Investment Grade CDS Index 82.5 +2.5%
  

• US Energy High-Yield OAS 454.05 -1.54%
• Bloomberg TRACE # Distressed Bonds Traded 436.0 -34.0
  

• European Financial Sector CDS Index 110.62 +1.0%

• Italian/German 10Y Yld Spread 211.0 basis points -10.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 143.86 +2.4%
  

• Emerging Market CDS Index 329.06 +.69%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 26.86 +.41%
  
• Ukraine Sovereign Debt Credit Default Swap 11,737.0 +.84%
  

• 2-Year Swap Spread 26.25 basis points unch.
  

• TED Spread 47.25 basis points +3.25 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -17.5 basis points +1.0 basis point
  
• MBS  5/10 Treasury Spread  112.0 -1.0 basis point
  
• iShares CMBS ETF 48.81 -.33%
• Avg. Auto ABS OAS 1.02 +2.0 basis points
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 49.27 +.30%
• 3-Month T-Bill Yield 2.32% -1.0 basis point
  

• Yield Curve -30.5 basis points (2s/10s) -4.75 basis points
  

• China Iron Ore Spot 113.5 USD/Metric Tonne -2.6%

• Citi US Economic Surprise Index -56.5 +5.3 points

• Citi Eurozone Economic Surprise Index -62.4 +1.5 points
  

• Citi Emerging Markets Economic Surprise Index 22.3 -5.0 points

• 10-Year TIPS Spread 2.51 -2.0 basis points
  
• Highest target rate probability for November 2nd FOMC meeting: 63.7%(-4.3 percentage points) chance of 3.0%-3.25%. Highest target rate probability for December 14th meeting: 48.0%(-2.1 percentage points) chance of 3.25%-3.5%.
  

US Covid-19:

• 266 new infections/100K people(last 7 days total). 15.3%(-.8 percentage points) of 1/14/22 peak(1,740) -12/100K people from prior report.
  
• New Covid-19 patient hospital admissions per 100K population -72.7%(-2.2 percentage points) from peak 7-day avg. of 1/9/22 - 1/15/22
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -73 open in Japan 
• China A50 Futures: Indicating -121 open in China

• DAX Futures: Indicating -11 open in Germany

Portfolio:

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

• Disclosed Trades:  None
  

• Market Exposure:  50% net long