Stocks Reversing Higher into Final Hour on Less Hawkish Fed Hopes, Buyout Speculation, Short-Covering, Tech/Energy Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Modestly Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume:  Below Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 24.8 +8.8%
• DJIA Intraday % Swing .87%
  
• Bloomberg Global Risk On/Risk Off Index 46.9 -2.7%

• Euro/Yen Carry Return Index 149.87 +.72%

• Emerging Markets Currency Volatility(VXY) 11.4 +1.2%

• CBOE S&P 500 Implied Correlation Index 45.7 +3.6% 

• ISE Sentiment Index 112.0 +9.0 points
  

• Total Put/Call .99 -15.4%

• NYSE Arms .96 +10.3%

Credit Investor Angst:

• North American Investment Grade CDS Index 79.05 -1.99%
  

• US Energy High-Yield OAS 371.08 -1.17%
• Bloomberg TRACE # Distressed Bonds Traded 431.0 -12.0
  

• European Financial Sector CDS Index 97.61 -.63% 
• Credit Suisse Subordinated 5Y Credit Default Swap 456.57 -1.0%
  

• Italian/German 10Y Yld Spread 189.0 basis points +2.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 132.28 -.21%
  

• Emerging Market CDS Index 236.07 -.25%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 27.29 +.85%

• 2-Year Swap Spread 30.0 basis points -1.5 basis points
  

• TED Spread 47.0 basis points +1.0 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -30.0 basis points -.25 basis point
  
• MBS  5/10 Treasury Spread  150.0 +2.0 basis points
  
• Bloomberg US Agg CMBS Avg OAS 125.0 unch.
  
• Avg. Auto ABS OAS 1.16 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 47.62 -.37%
• 3-Month T-Bill Yield 4.25% -1.0 basis point
  

• China Iron Ore Spot 108.55 USD/Metric Tonne -.77%
• Dutch TTF Nat Gas(European benchmark) 134.7 euros/megawatt-hour -3.18%

• Citi US Economic Surprise Index 16.0 -3.0 points

• Citi Eurozone Economic Surprise Index 40.4 +2.0 points
  

• Citi Emerging Markets Economic Surprise Index -10.4 -7.1 points
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 230.20 -.19:  Growth Rate +11.2% -.1 percentage point, P/E 17.2 unch.
  
• Bloomberg US Financial Conditions Index -.72 -13.0 basis points
  
• Yield Curve -79.75 basis points (2s/10s) -5.0 basis points
• US Atlanta Fed GDPNow Forecast +3.19% unch.
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +4.87% unch.: CPI YoY +7.49% unch.
  
• 10-Year TIPS Spread 2.29 +1.0 basis point
  
• Highest target rate probability for Feb. 1st FOMC meeting: 51.6%(+2.7 percentage points) chance of 4.75%-5.0%. Highest target rate probability for March 22nd meeting: 42.7%(+6.1 percentage point) chance of 5.0%-5.25%.
  

US Covid-19:

• 140 new infections/100K people(last 7 days total). 8.0%(+0.0 percentage points) of 1/14/22 peak(1,740) +0/100K people from prior report.
  
• New Covid-19 patient hospital admissions per 100K population -77.4%(+.1 percentage point) from peak 7-day avg. of 1/9/22 - 1/15/22
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +70 open in Japan 
• China A50 Futures: Indicating -16 open in China

• DAX Futures: Indicating +11 open in Germany

Portfolio:

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

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

• Market Exposure: Moved to 75% Net Long