Stocks Reversing Sharply Higher into Afternoon on Peak Inflation Hopes, Dollar Weakness, Short-Covering, Energy/Financial Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume:  Above Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 32.1 -4.3%
• DJIA Intraday % Swing 4.7%
  
• Bloomberg Global Risk On/Risk Off Index 47.6 -1.6%

• Euro/Yen Carry Return Index 148.5 +1.0%

• Emerging Markets Currency Volatility(VXY) 12.6 unch.

• CBOE S&P 500 Implied Correlation Index 51.9 +.8% 

• ISE Sentiment Index 91.0 -24.0 points
  

• Total Put/Call .85 -15.8%

• NYSE Arms .56 -27.3%

Credit Investor Angst:

• North American Investment Grade CDS Index 101.02 -1.6%
  

• US Energy High-Yield OAS 424.99 -.67%
• Bloomberg TRACE # Distressed Bonds Traded 408.0 unch.
  

• European Financial Sector CDS Index 143.69 -2.9% 
• Credit Suisse Subordinated 5Y Credit Default Swap 450.5 +.2%
  

• Italian/German 10Y Yld Spread 239.0 basis points -3.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 205.17 +1.5%
  

• Emerging Market CDS Index 325.67 +.49%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 25.19 -.03%

• 2-Year Swap Spread 33.25 basis points +.5 basis point
  

• TED Spread 28.75 basis points -2.25 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -70.5 basis points -.25 basis point
  
• MBS  5/10 Treasury Spread  176.0 -5.0 basis points
  
• iShares CMBS ETF 45.58 unch.
• Avg. Auto ABS OAS .82 +1.0 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 46.46 +.37%
• 3-Month T-Bill Yield 3.67% +7.0 basis points
  

• Yield Curve -49.5 basis points (2s/10s) -10.75 basis points
  

• China Iron Ore Spot 92.4 USD/Metric Tonne -.3%
• Dutch TTF Nat Gas(European benchmark) 153.9 euros/megawatt-hour -3.9%

• Citi US Economic Surprise Index 13.40 +8.1 points

• Citi Eurozone Economic Surprise Index 5.0 +.5 point
  

• Citi Emerging Markets Economic Surprise Index -4.2 -.3 point
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 235.33 -.24:  Growth Rate +15.3% -.1 percentage point, P/E 15.6 +.4
  
• Bloomberg US Financial Conditions Index -1.19 +7.0 basis points
  
• US Atlanta Fed GDPNow Forecast +2.89% unch.
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +5.11% unch.: CPI YoY +8.20% unch.
  
• 10-Year TIPS Spread 2.33 +2.0 basis points
  
• Highest target rate probability for December 14th FOMC meeting: 62.3%(+29.8 percentage points) chance of 4.5%-4.75%. Highest target rate probability for February 1st meeting: 53.5%(+23.8 percentage points) chance of 4.75%-5.0%.
  

US Covid-19:

• 84 new infections/100K people(last 7 days total). 4.8%(+.0 percentage point) of 1/14/22 peak(1,740) +0/100K people from prior report.
  
• New Covid-19 patient hospital admissions per 100K population -84.8%(-.3 percentage point) from peak 7-day avg. of 1/9/22 - 1/15/22
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +508 open in Japan 
• China A50 Futures: Indicating +54 open in China

• DAX Futures: Indicating +103 open in Germany

Portfolio:

• Higher:  On gains in my tech/medical/industrial/commodity sector longs
  

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

• Market Exposure:  Moved to 50% Net Long