Stocks Reversing Substantially Lower into Final Hour on US Policy-Induced Stagflation Fears, Year-End Tax Loss Selling, Technicals, Alt Energy/Gambling Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Almost Every Sector Declining
  

• Volume:  Below Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 22.3 -1.4%
• DJIA Intraday % Swing 1.18%
  
• Bloomberg Global Risk On/Risk Off Index 49.9 +1.0%

• Euro/Yen Carry Return Index 150.3 +.30%

• Emerging Markets Currency Volatility(VXY) 10.7 +1.1%

• CBOE S&P 500 Implied Correlation Index 46.6 +.8% 

• ISE Sentiment Index 96.0 -4.0 points
  

• Total Put/Call .95 -29.1%

• NYSE Arms 1.11 -24.0%

Credit Investor Angst:

• North American Investment Grade CDS Index 85.4 +3.2%
  

• US Energy High-Yield OAS 397.31 +.7%
• Bloomberg TRACE # Distressed Bonds Traded 419.0 +3.0
  

• European Financial Sector CDS Index 106.6 +.14% 
• Credit Suisse Subordinated 5Y Credit Default Swap 451.17 +4.4%
  

• Italian/German 10Y Yld Spread 218.0 basis points +4.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 131.60 +1.9%
  

• Emerging Market CDS Index 247.39 +2.1%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 27.2 -.44%

• 2-Year Swap Spread 29.75 basis points +.25 basis point
  

• TED Spread 49.5 basis points +4.5 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -31.5 basis points -1.0 basis point
  
• MBS  5/10 Treasury Spread  136.0 +2.0 basis points
  
• Bloomberg US Agg CMBS Avg OAS 121.0 unch.
  
• Avg. Auto ABS OAS 1.02 -4.0 basis points
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 47.6 -.08%
• 3-Month T-Bill Yield 4.24% -1.0 basis point
  

• China Iron Ore Spot 107.75 USD/Metric Tonne +.2%
• Dutch TTF Nat Gas(European benchmark) 106.6 euros/megawatt-hour -7.7%

• Citi US Economic Surprise Index 5.7 -2.8 points

• Citi Eurozone Economic Surprise Index 66.7 +4.9 points
  

• Citi Emerging Markets Economic Surprise Index -19.7 -.6 point
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 229.8 -.32:  Growth Rate +11.1% -.2 percentage point, P/E 16.6 -.4
  
• Bloomberg US Financial Conditions Index -.54 +6.0 basis points
  
• Yield Curve -68.0 basis points (2s/10s) +2.25 basis points
• US Atlanta Fed GDPNow Forecast +2.78% -41.0 basis points
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +4.87% +15.0 basis points: CPI YoY +7.49% +72.0 basis points
  
• 10-Year TIPS Spread 2.16 -4.0 basis points
  
• Highest target rate probability for March 22nd FOMC meeting: 52.4%(-2.1 percentage points) chance of 4.75%-5.0%. Highest target rate probability for May 3rd meeting: 46.3%(+16.3 percentage point) chance of 4.75%-5.0%.
  

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 -79.0%(-2.5 percentage points) from peak 7-day avg. of 1/9/22 - 1/15/22
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -140 open in Japan 
• China A50 Futures: Indicating -31 open in China

• DAX Futures: Indicating +8 open in Germany

Portfolio:

• Slightly Higher:  On gains in my index hedges
  

• Disclosed Trades:  Added to my (IWM)/(QQQ) hedges and then covered some
  

• Market Exposure: Moved to 25% Net Long