Stocks Modestly Lower into Afternoon on US Policy-Induced Stagflation Fears, China Economy Worries, Technical Selling, Tech/Commodity Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Modestly Higher
  

• Sector Performance: Mixed
  

• Volume: Above Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 13.2 +4.8%
• DJIA Intraday % Swing .58% -24.5%
  
• Bloomberg Global Risk On/Risk Off Index 59.7 -1.90%

• Euro/Yen Carry Return Index 170.9 -.19%

• Emerging Markets Currency Volatility(VXY) 7.83 unch.

• CBOE S&P 500 Implied Correlation Index 21.6 +2.4% 

• ISE Sentiment Index 139.0 +12.0
  

• Total Put/Call .82 -2.4%

• NYSE Arms .97 +10.2% 
• NYSE Non-Block Money Flow -$89.8M 
  

Credit Investor Angst:

• North American Investment Grade CDS Index 62.0 +.96%
  

• US Energy High-Yield OAS 344.26 -1.17%
• Bloomberg TRACE # Distressed Bonds Traded 352 +7.0
  

• European Financial Sector CDS Index 75.95 -.85% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 234.80 +.42%
  

• Italian/German 10Y Yld Spread 177.0 basis points +3.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 97.77 -.47%
  

• Emerging Market CDS Index 186.53 +.94%
• Israel Sovereign CDS 14.58 -.03%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 25.39 unch.

• 2-Year SOFR Swap Spread -20.0 basis points -1.5 basis points
  

• TED Spread 28.5 basis points +3.5 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -11.75 +.25 basis point
  
• MBS  5/10 Treasury Spread 152.0 -1.0 basis point
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 947.0 +3.0 basis points
  
• Avg. Auto ABS OAS 85.0 -3.0 basis points
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 41.61 -.42%
• 3-Month T-Bill Yield 5.38% +1.0 basis point
  

• China Iron Ore Spot 127.90 USD/Metric Tonne -.76%
• Dutch TTF Nat Gas(European benchmark) 40.10 euros/megawatt-hour -7.8%

• Citi US Economic Surprise Index 15.9 -9.7 points

• Citi Eurozone Economic Surprise Index -18.6 +5.1 points

• Citi Emerging Markets Economic Surprise Index 23.7 -2.1 points
• S&P 500 Current Quarter EPS Growth Rate YoY(491 of 500 reporting) +4.5% unch.
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 242.26 +.19:  Growth Rate +9.4% +.1 percentage point, P/E 18.8 -.1
  
• S&P 500 Current Year Estimated Profit Margin 12.12% -1.0 basis point
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(9 of 10 reporting) +50.6% unch.
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 284.89 +.43: Growth Rate +33.6% +.2 percentage point, P/E 28.4 -.6
  
• Bloomberg US Financial Conditions Index .52 +6.0 basis points
  
• Bloomberg Euro-Zone Financial Conditions Index .29 +6.0 basis points
  
• US Yield Curve -37.25 basis points (2s/10s) -3.5 basis points
  
• US Atlanta Fed 4Q GDPNow Forecast +1.19% -58.0 basis points
  
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 58.4% +3.1 percentage points
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +3.46% unch.: CPI YoY +3.04% unch.
  
• 10-Year TIPS Spread 2.22 unch.
  
• Highest target rate probability for Jan. 31st FOMC meeting: 87.4%(+2.7 percentage points) chance of 5.25%-5.5%. Highest target rate probability for March 20th meeting: 51.5%(-3.6 percentage points) chance of 5.0%-5.25%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -211 open in Japan 
• China A50 Futures: Indicating -6 open in China

• DAX Futures: Indicating +42 open in Germany

Portfolio:

• Slightly Higher:  On gains in my transport sector longs, index hedges and emerging market shorts
  

• Disclosed Trades: None
  

• Market Exposure: 75% Net Long