Stocks Reversing Lower into Afternoon on US Policy-Induced Stagflation Fears, Fed Credibility Worries, Earnings Outlook Concerns, Transport/Medical Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Mixed
  

• Volume:  Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 20.0 +1.8%
• DJIA Intraday % Swing 1.28%
  
• Bloomberg Global Risk On/Risk Off Index 59.1 -1.8%

• Euro/Yen Carry Return Index 146.7 +.3%

• Emerging Markets Currency Volatility(VXY) 10.5 -.1%

• CBOE S&P 500 Implied Correlation Index 33.5 -.8% 

• ISE Sentiment Index 111.0 -14.0 points
  

• Total Put/Call .79 -12.2%

• NYSE Arms 1.19 -2.5%

Credit Investor Angst:

• North American Investment Grade CDS Index 70.5 +1.1%
  

• US Energy High-Yield OAS 350.13 -.88%
• Bloomberg TRACE # Distressed Bonds Traded 309.0 -4.0
  

• European Financial Sector CDS Index 83.4 -1.23% 
• Credit Suisse Subordinated 5Y Credit Default Swap 351.63 -.78%
  

• Italian/German 10Y Yld Spread 182.0 basis points -5.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 103.8 -.54%
  

• Emerging Market CDS Index 230.77 +.88%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 27.88 +.09%

• 2-Year Swap Spread 29.0 basis points +.75 basis point
  

• TED Spread 15.25 basis points -.25 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -9.5 +.5 basis point
  
• MBS  5/10 Treasury Spread  135.0 unch.
  
• Bloomberg US Agg CMBS Avg OAS 104.0 unch.
  
• Avg. Auto ABS OAS .70 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 48.0 unch.
• 3-Month T-Bill Yield 4.72% +3.0 basis points
  

• China Iron Ore Spot 124.0 USD/Metric Tonne +.1%
• Dutch TTF Nat Gas(European benchmark) 52.7 euros/megawatt-hour -1.8%

• Citi US Economic Surprise Index 22.8 -1.4 points

• Citi Eurozone Economic Surprise Index 93.0 -1.4 points
  

• Citi Emerging Markets Economic Surprise Index 3.7 -2.2 points
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 223.94 -.17:  Growth Rate +.3% -.1 percentage point, P/E 18.4 unch.
• S&P 500 Current Year Estimated Profit Margin 12.07% -1.0 basis point
  
• Bloomberg US Financial Conditions Index .42 -1.0 basis point
  
• Yield Curve -83.0 basis points (2s/10s) -2.0 basis points
• US Atlanta Fed 1Q GDPNow Forecast +2.16% unch.
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +4.30% unch.: CPI YoY +6.44% unch.
  
• 10-Year TIPS Spread 2.34 -2.0 basis points
  
• Highest target rate probability for May 3rd FOMC meeting: 68.8%(-1.7 percentage points) chance of 5.0%-5.25%. Highest target rate probability for June 14th meeting: 49.3%(-.1 percentage point) chance of 5.0%-5.25%.
  

US Covid-19:

• 84 new infections/100K people(last 7 days total). 4.8%(-0.0 percentage point) of 1/14/22 peak(1,740) -0/100K people from prior report.
  
• New Covid-19 patient hospital admissions per 100K population -83.0%(+.0 percentage point) from peak 7-day avg. of 1/9/22 - 1/15/22
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -1 open in Japan 
• China A50 Futures: Indicating +11 open in China

• DAX Futures: Indicating -21 open in Germany

Portfolio:

• Slightly Lower:  On losses in my medical/industrial/commodity sector longs
  

• Disclosed Trades:  Added to my (IWM)/(QQQ) hedges
  

• Market Exposure: Moved to 25% Net Long