Stocks Higher into Final Hour on Less Hawkish Fed Hopes, Flight to Safety from Emerging Markets, Bargain-Hunting, Financial/Transport Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Mixed
  

• Volume:  Above Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 30.5 +2.6%
• DJIA Intraday % Swing 1.2%
  
• Bloomberg Global Risk On/Risk Off Index 49.4 -4.1%

• Euro/Yen Carry Return Index 151.62 +.91%

• Emerging Markets Currency Volatility(VXY) 12.9 +2.3%

• CBOE S&P 500 Implied Correlation Index 53.3 -1.0% 

• ISE Sentiment Index 105.0 +5.0 points
  

• Total Put/Call .92 -2.1%

• NYSE Arms 1.35 +181.2%

Credit Investor Angst:

• North American Investment Grade CDS Index 93.32 -1.7%
  

• US Energy High-Yield OAS 386.54 -1.1%
• Bloomberg TRACE # Distressed Bonds Traded 444.0 +18.0
  

• European Financial Sector CDS Index 132.44 -2.6% 
• Credit Suisse Subordinated 5Y Credit Default Swap 355.57 -.31%
  

• Italian/German 10Y Yld Spread 226.0 basis points -7.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 228.81 +5.4%
  

• Emerging Market CDS Index 311.86 -.69%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 24.26 -1.44%

• 2-Year Swap Spread 36.5 basis points -1.75 basis points
  

• TED Spread 43.25 basis points +4.25 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -59.75 basis points +3.0 basis points
  
• MBS  5/10 Treasury Spread  174.0 +2.0 basis points
  
• iShares CMBS ETF 44.93 -.08%
• Avg. Auto ABS OAS .92 +1.0 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 46.19 -.52%
• 3-Month T-Bill Yield 4.0% +4.0 basis points
  

• Yield Curve -27.75 basis points (2s/10s) +.25 basis point
  

• China Iron Ore Spot 90.60 USD/Metric Tonne -.07%
• Dutch TTF Nat Gas(European benchmark) 96.50 euros/megawatt-hour -15.0%

• Citi US Economic Surprise Index 9.6 -11.1 points

• Citi Eurozone Economic Surprise Index 22.3 +1.3 points
  

• Citi Emerging Markets Economic Surprise Index 1.4 +7.8 points
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 233.60 -.66:  Growth Rate +14.8% -.3 percentage point, P/E 16.2 +.3
  
• Bloomberg US Financial Conditions Index -1.22 -5.0 basis points
  
• US Atlanta Fed GDPNow Forecast +2.85% unch.
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +5.16% unch.: CPI YoY +8.14% unch.
  
• 10-Year TIPS Spread 2.60 +4.0 basis points
  
• Highest target rate probability for December 14th FOMC meeting: 52.6%(+7.0 percentage points) chance of 4.5%-4.75%. Highest target rate probability for February 1st meeting: 50.3%(+2.8 percentage points) chance of 4.75%-5.0%.
  

US Covid-19:

• 77 new infections/100K people(last 7 days total). 4.4%(-2.8 percentage points) of 1/14/22 peak(1,740) -51/100K people from prior report.
  
• New Covid-19 patient hospital admissions per 100K population -86.1%(-.8 percentage point) from peak 7-day avg. of 1/9/22 - 1/15/22
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +105 open in Japan 
• China A50 Futures: Indicating -33 open in China

• DAX Futures: Indicating +34 open in Germany

Portfolio:

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

• Disclosed Trades:  None
  

• Market Exposure:  75% Net Long