Thursday Watch

Night Trading 

• Asian equity indices are +.25% to +.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 80.0 +.5 basis point. 

• China Sovereign CDS 43.0 +.5 basis point.
  

• Bloomberg Emerging Markets Currency Index 54.65 +.06%. 
• Bloomberg Global Risk-On/Risk Off Index 3,634.0 -4.0 points.
• Volatility Index(VIX) futures 21.1 +.61%.
• Euro Stoxx 50 futures -.06%.

• S&P 500 futures -.12%.

• NASDAQ 100 futures -.12%. 

Morning Preview Links

Earnings of Note 
Company/Estimate 

 

Before the Open: 

• (DAL)/.14
• (TSM)/6.22
  

After the Close:

• (WAFD)/.70
  

Economic Releases

8:30 am EST

• PPI Final Demand MoM for Dec. is estimated to rise +.4% versus a +.8% gain in Nov.
• PPI Ex Food and Energy MoM for Dec. is estimated to rise +.5% versus a +.7% gain in Nov.
• Initial Jobless Claims for last week are estimated to fall to 200K versus 207K the prior week.
• Continuing Claims are estimated to fall to 1733K versus 1754K the prior week.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The China Trade Data report, weekly EIA natural gas inventory report, 30Y T-Bond auction, (MNST) investor day and the (BIIB) analyst call could also impact global trading today.

US Equity Market Hours

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are mostly higher, boosted by industrial and consumer shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the day.

Stocks Slightly Higher into Final Hour on Stable Long-Term Rates, Oil Gain, Dollar Weakness, Commodity/Shipping Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line:  Modestly Lower
  

• Sector Performance:  Mixed
  

• Volume:  Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 18.0 -2.3%
• Bloomberg Global Risk On/Risk Off Index 3,620.0 +12.0 points

• Euro/Yen Carry Return Index 135.01 -.03%

• Emerging Markets Currency Volatility(VXY) 9.93 -1.6%

• CBOE S&P 500 Implied Correlation Index 29.9 +2.3% 

• ISE Sentiment Index 104.0  -38.0 points
  

• Total Put/Call .82 +10.8%

• NYSE Arms .99 +39.4%

Credit Investor Angst:

• North American Investment Grade CDS Index 51.35 -.82%
  

• US Energy High-Yield OAS 376.15 -2.1%

• European Financial Sector CDS Index 57.90 -1.4%

• Italian/German 10Y Yld Spread 132.0 -1.0 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 79.91 -.05%
  

• Emerging Market CDS Index 198.58 +.46%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 32.13 -.59%

• 2-Year Swap Spread 18.75 -2.0 basis points
  

• TED Spread 13.0 +.25 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap 2.0 unch.
  
• MBS  5/10 Treasury Spread  78.25 +.5 basis point
  
• IHS Markit CMBX BBB- 6 72.25 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 54.65 +1.27%
• 3-Month T-Bill Yield .11% unch.
  

• Yield Curve 84.25 -1.25 basis point
  

• China Iron Ore Spot 132.0 USD/Metric Tonne +.63%

• Citi US Economic Surprise Index 11.60 +5.6 points

• Citi Eurozone Economic Surprise Index 34.1 -5.1 points
  

• Citi Emerging Markets Economic Surprise Index -.3 -3.4 points

• 10-Year TIPS Spread 2.52 -5.0 basis points
  
• 21.2%(unch.) chance of no change at March 16th FOMC meeting, 12.3%(-.2 percentage point) chance of no change at May 4th meeting

US Covid-19:

• 1,592 new infections/100K people(last 7 days total) -24/100K people from prior report. 98%(-2.0 percentage points) of Jan. 9 peak.
  
• New Covid-19 patient hospital admissions per 100K population at new record high +28.6%(-3.9 percentage points from prior report) from prior 7-day avg. of 12/28/21 - 1/3/22
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -80 open in Japan 
• China A50 Futures: Indicating +116 open in China

• DAX Futures: Indicating -19 open in Germany

Portfolio:

• Slightly Higher: On gains in my transport/industrial/tech sector longs and index hedges
  

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

• Market Exposure:  Moved to 75% Net Long
  

Afternoon Market Internals

NYSE Composite Index:

• Volume Running +2.4% Above 100-Day Average 
• 7 Sectors Rising, 4 Sectors Declining
• 49.6% of Issues Advancing, 46.6% Declining
• 91 New 52-Week Highs, 48 New Lows
• 51.5% of Issues Above 200-day Moving Average
• Average 14-Day RSI 48.0% 
• Bloomberg Global Risk-On/Risk-Off Index 3,610.0 +6.0 points
• Russell 1000: Growth/Value 17,332 +.45%
  
• Vix 18.2 -1.3%
• Total Put/Call .80 +8.1%
• TRIN/Arms .91 +28.2%

Wedneday Watch

Evening Headlines

Bloomberg:       

• China’s Crackdown Leaves the World’s Biggest Gaming Hub on the Brink.  
• China Property Firms Face Raft of Key Payments This Week.  
• West Coast Airport Flights Halted on North Korea’s Missile.
• Israel Gives Fourth Doses as EU Warns Against Them: Virus Update.
• Wary Global Bond Markets Brace for the Supply Floodgates to Open.  
• Asia Stocks Rise After Powell Inflation Comments: Markets Wrap.
• Oil Surges Alongside Equities as Powell Reassures Investors.  
• Powell Makes Case for Fed Curbing Inflation While Doing No Harm.
• Stacey Abrams and Voting-Rights Allies Spurn Biden’s Atlanta Events.  
• Students at New York City’s Largest High School Stage Walkout Over Covid Protocols.  
• Citi to Exit Mexico Retail Banking, Its Biggest Branch Network.  
• Ken Griffin’s Fortune Soars to $28 Billion on Citadel Securities Deal.   
• Can’t Find Pasta or Cat Food? Empty Store Shelves Are Here to Stay.  
• 50 Company Stocks to Watch in 2022.  
• Jeffrey Gundlach Sees ‘Recessionary Pressure’ Building With Inflation.  
• Ares-Backed Restaurant Chain Cooper’s Hawk Plans 2022 IPO.

Wall Street Journal:

• Citadel Securities to Receive First Outside Investment.
• Why the Catholic Church Is Losing Latin America.
• China Lockdowns Hit Factories, Ports in Latest Knock to Supply Chains. 
• The Greening of the Federal Reserve. Powell endorses bank stress tests to allocate capital for climate policy. 
• GM Takes Aim at Carvana, Vroom With Used-Car Website.
• Facebook Owner Meta Names DoorDash CEO to Board.

Fox News:

• Rand Paul rips Fauci following latest hearing fireworks: He doesn't want debate because he 'is science'.
•  OPINION: The arrogance of Anthony Fauci.
• Biden trusted thousands of illegal immigrants to report to ICE - they didn't.

CNBC.com:

• Fed Chair Powell says rate hikes, tighter policy will be needed to control inflation.
• Empty grocery shelves return as sick employees, supply chain delays collide.
• Delta Air Lines battles with nation’s largest flight attendant union over shortened Covid sick leave.
• Medicare plans to pay for controversial Alzheimer’s drug, from Biogen.
• Crypto scams are the top threat to investors ‘by far,’ say securities regulators.

MarketWatch:   

• These 14 bank stocks are in the best position to benefit from rising interest rates.
  
• Here are dozens of ‘cheap’ stocks that could be poised to outperform as U.S. rates start to rise.

Zero Hedge:

• Ivermectin 'Works Throughout All Phases' Of COVID According To Leaked Military Documents.
• House Republicans Release Damning Fauci Emails Suggesting Concealed Knowledge Of Lab Leak. 
• Who Is Ray Epps? DoJ Refuses To Say, Jan6 Committee Claims 'Not A Fed'.
• China Halts Some US Flights As Omicron Wave Spreads.
• Biden's Education Secretary Allegedly Requested 'Domestic Terrorism' Letter From School Boards Group.
• China Auto Sales Rise 4.5% In 2021, Tesla Sells Record 70,602 Vehicles In December.
• Bill Gates Flip Flops After Turning Omicron 'FUD' Up To '11'.
• Othering Unvaccinated Persons.
• Here Are The Two Things That Will Crush The Fed's Hiking Plans.
• After The Storm.
• It Turns Out If You Doubted COVID Headlines, You Were Correct.
• Biogen Shares Crater After CMS Limits Coverage For Alzheimer's Drug.
• WTI Dips On Smaller Than Expected Crude Draw, Big Gasoline Build.
• Bitcoin, Bonds, Big-Tech, & Bullion Bid On Powell's 'Goldilocks' Testimony.

Newsmax:

• Emails: Ed Sec. Cardona Solicited Group's Letter Branding Concerned Conservative Parents 'Terrorists'.  
• Sen. Graham: Biden Lying on Voting Rights.
• Rep. Tenney: Dems Want Voting Reform So They Can 'Cheat'.

TheGatewayPundit.com:  

• BREAKING: House GOP Oversight Members Release Emails of Fauci and NIH Officials Concealing Information on Wuhan Lab Leak Theory from the American Public.
• “I’m Insulted You Asked That Question” – Biden Snaps at Reporter Asking About Stacey Abrams Snub (VIDEO).
• “Premeditated Manslaughter of Millions of People Coordinated at the Highest Levels” – Naomi Wolf and Dr. Malone Respond to Project Veritas BOMBSHELL (VIDEO).
• Biden Slips Up, Calls Kamala “President Harris” in Speech Calling on Senate to Nuke Filibuster Rules For ‘Voting Rights’ Bill (VIDEO).
• COVID Child Abuse: Virginia Elementary School Teacher Holds Class Outdoors in Sub-Freezing Weather (Update: “Snack and Mask Break”?).
• Cops Suspect Bob Saget Suffered ‘a Heart Attack or Stroke’ Based on Position of Body.
• “Was Ray Epps A Fed?” – ‘I Can’t Answer That’: FBI Asst. Director Refuses To Answer Any of Ted Cruz’s Questions About Jan 6 in Fiery Exchange on Capitol Hill – (Video).
• Now Even the Far-Left Media is Reporting on the Grocery Crisis and Empty Shelves Across the Nation.
• BOOM! Senator Rand Paul RIPS into Serial Liar Dr. Tony Fauci and HE HATES EVERY MINUTE OF IT (VIDEO).
• “I Do Not Want to Have a Vaccination.. The Science Isn’t Strong Enough” – Brave Doctor Challenges UK Health Secretary and Tells He Will Not Get the Jab (VIDEO).

The Epoch Times:

• American Companies are Supercharging the Chinese Communist Party.
• CCP Mismanagement, Authoritarianism Pushing China Down Road to Economic Ruin: Experts.

Twitter:

• @SKMorefield - Tucker Carlson & Dr. Scott Atlas discuss how the CDC is finally coming clean after their years-long deception about Covid death numbers. "This was an intentional inculcation of fear in the American public." (video)
• @drscott_atlanta - The #CDC Director States 1) Vaccines don’t prevent transmission of COVID virus 2) The vast majority of deaths from #covid are in patients with “at least 4 co-morbidities” THEN Why are they forcing the rest of us to get #vaccinated? (video)
• @nataliegwinters - CONFLICT: Fauci’s Daughter is a Software Engineer at Twitter, A Company Which Suspends People for Disagreeing With Her Father.

GETTR:

•  @vanguardmma - Pfizer CEO: “We know the two doses offer very little protection, if any.” (video) All of my social media accounts (Twitter, IG, & TikTok) were just suspended for “misinformation” and “community guidelines” for posting this video. Hence, they’re calling the CEO of Pfizer’s own words “COVID misinformation.”

OpenVAERS:

• VAERS US COVID Vaccine Adverse Event Reports. 715,856 Reports(+6,773 from prior week) Through December 31, 2021.

SKirsch.com:

• Using the MGH numbers with our own VAERS queries, we have 247 cases per million doses from the MGH study divided by 5.97 cases per million doses from VAERS. 247/5.97 = 41. This suggests that the VAERS under-reporting factor (URF) is 41X.

Covid-19(Data, Maps, Graphs):

• Our World in Data:  New Global Covid-19 Cases(7-day rolling average graphs). New US Covid Hospital Admissions/ICU Admissions/Deaths
  
• FT.com:  Fully Vaccinated by Country(graph). Global Lockdown Stringency Index(map).
• Bloomberg.com:  International Travel Restrictions.  Case Graphs by State.
  
• NYTimes.com:  County Trends and Clusters. Local ICU Occupancy.
  
• Brown School of Public Health:  Covid Severity by State/County(map).  US Hospital Capacity(region).
  
• CovidActNow:  Covid Severity/Infection Rate by Metro Area.
  
• KFF:  US Vaccinations by Race/Ethnicity.
  
• Carnegie Mellon: Covid-Like Symptoms in Community. Covid Symptom Searches on Google. Covid-Related Dr.Visits.  Restaurant Visits. Wearing Masks. (graphs)
  
• Safegraph.com:  Commerce Patterns(graphs).

Night Trading 

• Asian equity indices are +.25% to +1.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 79.5 -.75 basis point. 

• China Sovereign CDS 42.5 -1.5 basis points.
  

• Bloomberg Emerging Markets Currency Index 54.01 +.09%. 
• Bloomberg Global Risk-On/Risk Off Index 3,616.0 +12.0 points.
• Volatility Index(VIX) futures 21.1 +.27%.
• Euro Stoxx 50 futures +.63%.

• S&P 500 futures -.04%.

• NASDAQ 100 futures -.07%. 

Morning Preview Links

Earnings of Note 
Company/Estimate 

 

Before the Open: 

• (JEF)/1.34
• (SJR)/.34
  

After the Close:

• (KBH)/1.77
  

Economic Releases

8:30 am EST

• The CPI MoM for Dec. is estimated to rise +.4% versus a +.8% gain in Nov.
• The CPI Ex Food and Energy MoM for Dec. is estimated to rise +.5% versus a +.5% gain in Nov.
• Real Avg. Weekly Earnings YoY for Dec.
  

10:30 am EST

• Energy inventory data

2:00 pm EST

• The Monthly Budget Statement for Dec. is estimated at -$5.0B versus -$191.3B in Nov.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The UK Industrial Production report, 10Y T-Note auction and the weekly MBA Mortgage Applications report could also impact global trading today.

US Equity Market Hours

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are higher, boosted by industrial and technology shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher. The Portfolio is 100% net long heading into the day.

Stocks Surging into Final Hour on More Dovish Fed Commentary, Stable Long-Term Rates, Diminished US Virus Mandate/Lockdown Fears, Tech/Energy Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line:  Substantially Higher
  

• Sector Performance:  Most Sectors Rising
  

• Volume:  Around Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 18.7 -3.9%
• Bloomberg Global Risk On/Risk Off Index 3,575.0 +85.0 points

• Euro/Yen Carry Return Index 135.14 +.51%

• Emerging Markets Currency Volatility(VXY) 10.1 -1.7%

• CBOE S&P 500 Implied Correlation Index 30.0 +1.7% 

• ISE Sentiment Index 146.0  +53.0 points
  

• Total Put/Call .72 -28.7%

• NYSE Arms .72 -8.9%

Credit Investor Angst:

• North American Investment Grade CDS Index 51.73 -1.8%
  

• US Energy High-Yield OAS 385.89 -1.5%

• European Financial Sector CDS Index 58.69 -1.6%

• Italian/German 10Y Yld Spread 133.0 +1.0 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 79.83 -.74%
  

• Emerging Market CDS Index 198.35 -.28%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 32.2 -1.08%

• 2-Year Swap Spread 20.75 +1.25 basis points
  

• TED Spread 12.75 -1.75 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap 2.0 unch.
  
• MBS  5/10 Treasury Spread  77.75 +.25 basis point
  
• IHS Markit CMBX BBB- 6 72.25 +.25 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 53.94 +.54%
• 3-Month T-Bill Yield .11% +2.0 basis points
  

• Yield Curve 85.5 +.75 basis point
  

• China Iron Ore Spot 129.45 USD/Metric Tonne +1.7%

• Citi US Economic Surprise Index 6.0 +.9 point

• Citi Eurozone Economic Surprise Index 39.5 -.9 point
  

• Citi Emerging Markets Economic Surprise Index 3.1 -.2 points

• 10-Year TIPS Spread 2.57 +6.0 basis points
  
• 21.2%(-2.7 percentage points) chance of no change at March 16th FOMC meeting, 12.5%(-1.9 percentage points) chance of no change at May 4th meeting

US Covid-19:

• 1,618 new infections/100K people(last 7 days total) at new record high +117/100K people from prior report
  
• New Covid-19 patient hospital admissions per 100K population at new record high +32.5%(-.2 percentage point) from prior 7-day avg. of 12/26/21 - 1/1/22
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +268 open in Japan 
• China A50 Futures: Indicating +45 open in China

• DAX Futures: Indicating +33 open in Germany

Portfolio:

• Higher: On gains in my transport/industrial/tech/medical/consumer discretionary sector longs

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

• Market Exposure:  Moved to 100% Net Long
  

Bear Radar

Style Underperformer:

• Large-Cap Value +.5%

Sector Underperformers:

• 1) Utilities -1.2% 2) Road & Rail -1.2% 3) Foods -.5%

Stocks Falling on Unusual Volume: 

• PKI, ACI, SWTX and PACB
  

Stocks With Unusual Put Option Activity:

• 1) ACI 2) BLL 3) TTWO 4) PACB 5) BCRX
  

Stocks With Most Negative News Mentions:

• 1) AMC 2) UHS 3) AA 4) IHC 5) APR
  

Charts:

• ETFs Falling on Unusual Volume
• Stocks Falling on Unusual Volume