Tuesday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 112.0 -2.0 basis points. 

• China Sovereign CDS 58.5 -1.0 basis point. 
• China Iron Ore Spot 116.9 USD/Metric Tonne -.11%.

• Bloomberg Emerging Markets Currency Index 48.0 -.05%.
• Bloomberg Global Risk-On/Risk Off Index  55.6 +.3%. 
• Bloomberg US Financial Conditions Index -.06 -3.0 basis points.
  
• Volatility Index(VIX) futures 23.2 +.41%.
• Euro Stoxx 50 futures n/a.

• S&P 500 futures -.10%.

• NASDAQ 100 futures -.15%.  

Morning Preview Links

Earnings of Note 
Company/Estimate 

 

Before the Open: 

• (ACI)/.67
• (BBBY)/-2.81
• (SNX)/2.92
  

After the Close:

• None of note
  

Economic Releases

6:00 am EST

• The NFIB Small Business Optimism Index for Dec. is estimated to fall to 91.5 versus 91.9 in Nov.

10:00 am EST

• Wholesale Trade Sales MoM for Nov. is estimated to rise +.2% versus a +.4% gain in Oct.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Powell speaking, China New Loans Data report, weekly US retail sales reports and the 3Y T-Note auction 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 technology and industrial shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the day.

Stocks Higher into Afternoon on Diminished China Hard-Landing Fears, Declining Fed Rate-Hike Odds, Short-Covering, Tech/Alt Energy Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume:  Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 21.3 +.9%
• DJIA Intraday % Swing .8%
  
• Bloomberg Global Risk On/Risk Off Index 55.9 +2.4%

• Euro/Yen Carry Return Index 146.7 +.8%

• Emerging Markets Currency Volatility(VXY) 10.8 +1.3%

• CBOE S&P 500 Implied Correlation Index 41.8 +.3% 

• ISE Sentiment Index 104.0 unch.
  

• Total Put/Call .84 -19.2%

• NYSE Arms 1.05 +14.1%

Credit Investor Angst:

• North American Investment Grade CDS Index 73.59 -2.1%
  

• US Energy High-Yield OAS 374.97 -1.92%
• Bloomberg TRACE # Distressed Bonds Traded 307.0 -20.0
  

• European Financial Sector CDS Index 90.11 -2.2% 
• Credit Suisse Subordinated 5Y Credit Default Swap 419.0 -4.5%
  

• Italian/German 10Y Yld Spread 196.0 basis points -6.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 112.6 -5.0%
  

• Emerging Market CDS Index 226.05 -.82%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 28.02 +.48%

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

• TED Spread 23.0 basis points +2.75 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -15.0 +1.0 basis point
  
• MBS  5/10 Treasury Spread  136.0 -1.0 basis point
  
• Bloomberg US Agg CMBS Avg OAS 115.0 unch.
  
• Avg. Auto ABS OAS .80 +1.0 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 48.0 +.5%
• 3-Month T-Bill Yield 4.60% unch.
  

• China Iron Ore Spot 117.3 USD/Metric Tonne +.19%
• Dutch TTF Nat Gas(European benchmark) 74.8 euros/megawatt-hour +7.6%

• Citi US Economic Surprise Index -9.1 -1.8 points

• Citi Eurozone Economic Surprise Index 77.1 -1.9 points
  

• Citi Emerging Markets Economic Surprise Index -23.2 -1.2 points
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 229.73 -.18:  Growth Rate +11.2% -.1 percentage point, P/E 17.1 +.2
  
• Bloomberg US Financial Conditions Index -.12 +9.0 basis points
  
• Yield Curve -69.25 basis points (2s/10s) +1.5 basis points
• US Atlanta Fed GDPNow Forecast +3.76% unch.
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +4.52% unch.: CPI YoY +6.48% unch.
  
• 10-Year TIPS Spread 2.22 +2.0 basis points
  
• Highest target rate probability for March 22nd FOMC meeting: 69.7%(+2.9 percentage points) chance of 4.75%-5.0%. Highest target rate probability for May 3rd meeting: 50.9%(+4.0 percentage points) 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 -74.2%(-4.5 percentage points) from peak 7-day avg. of 1/9/22 - 1/15/22
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +346 open in Japan 
• China A50 Futures: Indicating +70 open in China

• DAX Futures: Indicating +39 open in Germany

Portfolio:

• Higher:  On gains in my commodity/tech/utility/industrial sector longs
  

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

• Market Exposure: Moved to 50% Net Long
  

Bear Radar

Style Underperformer:

• Large-Cap Value +.2%
  

Sector Underperformers:

• 1) Pharma -1.7% 2) Biotech -1.5% 3) Defense -.8%

Stocks Falling on Unusual Volume: 

• XENE, BRKR, UCTT, ANAB, ATEC, COLL, NOC, INMD, BILI, DXCM, REGN, PRCT, AXNX, NVRO, M, BAX, LULU, IRWD, ORMP, BCRX, NBIX, ASND, NVCR, HRMY, ARVN, ARWR, CUTR and HKD
  

Stocks With Unusual Put Option Activity:

• 1) DD 2) KBH 3) DHR 4) SMH 5) M
  

Stocks With Most Negative News Mentions:

• 1) LULU 2) TLRY 3) M 4) REGN 5) SE
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +1.7%

Sector Outperformers:

• 1) Alt Energy +4.1% 2) Semis +3.8% 3) Software +3.0%

Stocks Rising on Unusual Volume:

• CINC, ALBO, DCT, RVNC, EXAS, AEHR, NVAX, VRDN, ARHS, ANF, LTH, DAWN, STAA, GFF, THO, BROS, TDW, SIBN, TSLA, IGMS, SMCI, ACLS, PTCT, WWE, ALKT and AYI
  

Stocks With Unusual Call Option Activity:

• 1) NOC 2) PLAY 3) URA 4) WWE 5) M

Stocks With Most Positive News Mentions:

• 1) APGN 2) STAA 3) ANF 4) EXAS 5) RVNC
  

Charts:

• ETFs Rising on Unusual Volume
• Stocks Rising on Unusual Volume

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running -.4% Below 100-Day Average 
• 2 Sectors Declining, 9 Sectors Rising
• 72.1% of Issues Advancing, 24.9% Declining
• 83 New 52-Week Highs, 6 New Lows
• 46.1%(+5.3%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 61.0 +6.0
  
• Bloomberg Global Risk-On/Risk-Off Index 55.9 +2.4%
  
• Russell 1000: Growth/Value 14,003.4 +1.3%
  
• Vix 21.3 +.8%
• Total Put/Call .85 -18.3%
• TRIN/Arms .92 unch.
  

Monday Watch

Today's Headlines

Bloomberg:                           

• Pro-Bolsonaro Rioters Breach Congress, Presidential Palace.   
• Brasilia Stormed by Pro-Bolsonaro Rioters.
• Lula Decrees Intervention in Brazil’s Capital to Contain Rioters. 
  
• China’s Open Borders Mark Covid Zero End, Spark Homecoming Rush.
• Sweden Signals All Turkish Demands for NATO Entry Cannot Be Met.   
• UK Manufacturers Say Soaring Energy Costs May Trigger Job Cuts.
• Economists Fret Over Perils Ahead for Global Growth.  
• Conviction Eludes Emerging-Market Rebound as Pain Points Remain.
  
• Another World War Is No Longer Unthinkable.  
• Ukraine Latest: Kyiv Denies Claim of Deadly Strike by Russia.
• Asia Stocks Climb as Traders Bet on Fed Slowdown: Markets Wrap.  
• Oil Edges Higher at Start of Week on Optimistic Demand Outlook.
• ‘Cesspool’ Website Under Fire as Economists Confront Harassment.
• Texas Judge Prevents Biden From Ending ‘Remain in Mexico’ Immigration Policy.
• New York and Chicago Mayors Tell Colorado to Stop Busing Migrants.  
• Southwest Crisis Shines Light on Clubby World of Airline Leaders.  
• ‘Let’s Fight Now’ Over Debt Ceiling, House GOP Lawmaker Says.  
• Blackstone Loses Fight Over Rent Controls at Manhattan Complex.  
• California Faces Another Week of Heavy Rain and Flooding.  
• Goldman to Cut About 3,200 Jobs This Week After Cost Review.
• Apple Will Talk Up Its Mixed-Reality Headset in 2023 But Not Much Else.  
• It Takes 6,000 Gallons of Water to Cool the World’s Fastest Supercomputer.
• Silicon Valley Can’t Quit Its Pizza Robot Obsession.  
• What Top Dealmakers Expect to See This Year in Health-Care M&A.  
• Your Sunday Briefing: Getting Down to Business.

Wall Street Journal:

• Wall Street Sets Low Bar for Earnings Season.
• Biden Heads to Southern Border Amid Criticism.
• Tech Industry Reversal Intensifies With New Layoffs.
• Developing World Isn’t Ready for EVs—Unless They Are Chinese.
• The White House Covid Censorship Machine. Newly released emails show how officials coerce social-media companies to toe the government line.
• Public Transit Goes Off the Rails With Fewer Riders, Dwindling Cash, Rising Crime.
• Electronic Court Filings Are a Privacy Nightmare. The private health and financial information of people involved in lawsuits is far too easy to search and steal. 
• House Republicans Turn Focus to Spending, China After Dramatic Speaker Vote.
• All the Cool, Crazy and Cute Tech We Found at CES 2023.
• China, a Pioneer in Regulating Algorithms, Turns Focus to Deepfakes.
• Damar Hamlin Gives Thanks for Fans’ Support Since Collapsing.
• The Next Trend in ‘Clean’ Beauty Is in Your Perfume Bottle.

Fox News:

• Biden's border trip ripped as city reportedly cleans up migrant camps, ramps up detentions ahead of visit. 
• Texas gov hands Biden scathing letter in first visit to southern border as president.

CNBC:

• Everyone’s elite, but not for long. Airlines make travel perks harder to earn this year.
• BMW’s first ‘color-changing’ concept car is here—take a look.
• How health insurance may have made health care more expensive.

Zero Hedge:   

• Bolsonaro Supporters Storm Brazil National Congress, Breach Presidential Palace, Top Court: Live Feed.
• Biden Blames Southern Border Crisis On Republicans Before His First Planned Trip To The Region. 
• Hedge Fund CIO: "To Maintain Control, Government Must Instill Fear While Delivering Economic Growth". 
• Arizona's Maricopa County To Investigate Election Day Printer Issues.
• AGs Slam White House Over Multiple Examples Of Big Tech Collusion To Censor Dissent.
• Weekend News Round Up - Newsquawk Asia-Pac Market Open.
• 9,000 NYC Nurses Preparing To Strike If No Tentative Agreements Reached With Hospitals Tonight.
• A Simple And Clear View On Markets And The Economy.
• China Extends Aggressive Gold Buying With Another 30 Tons Purchase In December.
• Goldman Trader: While All Attention Is On Rates, The Real Risk Is That Global QT Is Just Starting.
• Mr. Market May Be In Denial Over The Shift In Interest Rates.
• Russian Military Says "Retaliation" Strike Killed Over 600 Ukrainian Soldiers.
• Americans Extremely Pessimistic About US Prospects in 2023: Gallup.
• Luongo On 2023: Biden Impeached, Riyal De-Pegged, & Fed Terminal Rate Closer To 7%.
• Home Sellers Get Desperate, Shower Buyers With Concessions.
• Global ESG Bond Issuance Records First-Ever Annual Decline.
• How Global Strikes Play Right Into The Great Reset's Hands.
• India Just Became The World's 3rd Largest Automobile Market.
• An Age Of Decay.
• 2022 Box Office Still 33% Shy Of Pre-Pandemic Levels.
• In 2022, The World As We Know It Ended. Decades Of Conflict Lie Ahead...

MarketWatch.com:            

• Biden to get a firsthand look at US-Mexico border situation.
  
• ‘Markets are going to get rocked’ as Fed is likely to push rates higher, economist warns.
  
• 10 trends that will define the dining world in 2023.

NewsMax:  

• Ben Carson: COVID Still Being Used to Control Americans.
• Horowitz: GOP Being 'Too Nice' With Dems' Attacks.

TheGatewayPundit.com:  

• Complete List of the Key Concessions McCarthy Reportedly Gave to Conservatives in the House to Win the Speakership.
• 21-Year-Old US Army Fire Control Specialist Dies Suddenly While in the Shower at Her Fiancés Home.
• Andrew Tate Fires Off Cryptic Tweet After Reports He Was Taken to Hospital From Romanian Jail.
• Chechen Commander Calls $3 Billion in US Military Aid “Money Laundering Scheme – No More that 15% Will Reach the Trenches”.
• Local El Paso Reporter Confirms Police Were “Arresting People” at the Border in Advance of Biden’s Drive-By Visit (VIDEO).
• VIDEO: College Basketball Player Suddenly Collapses During Game.
• BRAZIL UPDATE 4: Banner at Capital Protest “WE WANT THE SOURCE CODE”.
• BREAKING: Millions of Brazilians Descend on Brasilia, Storm Congress – SHOTS FIRED (VIDEO).
• Mars Unveils Limited-Edition All-Female M&M’s Bag Featuring Lesbians and ‘Fat Positive’ Candies to Celebrate Women.
• El Paso Rushes to Remove Illegal Immigrants and Disappear Migrant Camps Ahead of Joe Biden’s Visit.
• Weekly Data from New South Wales Proves that Vaccine is Ineffective Against COVID – 86% of Deaths and 80% of Hospitalizations were Vaccinated.
• BRAVO, SUNDAY MORNING FUTURES! Kari Lake Tells Maria Bartiromo She Is Willing to Take Election Fraud Case All the Way to US Supreme Court (VIDEO).
• 17-Year-Old Basketball Player Dies Suddenly at Home Due to “Medical Condition”.
• Investigative Reporter Paul Sperry Responds After ‘Twitter Files’ Documents Reveal Adam Schiff Violated Constitution to Have Him Removed from Twitter.

Twitter:

• @bennyjohnson - Tucker Carlson takes flamethrower to Regime Psy-Op to GASLIGHT you about January 6th— Debuks LIE AFTER LIE. (video)
• @healthbyjames -  British Heart Foundation Just Announced 30k Excess Cardiac Deaths In England. (video)
• @theinformantofc - A police officer is protected and applauded by protesters in #Brasilia, during an invasion of the buildings of the three powers. (video) The number of people protesting in Brazil only increases. (video)
  

OpenVAERS:

• VAERS US COVID Vaccine Adverse Event Reports. 915,411 Reports(+3,337 from prior week) Through December 23rd, 2022.
  

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). 
• COVID Money Tracker. Tracking the Covid response.
  

Night Trading

• Asian indices are +.25% to +1.25% on average.
• Asia Ex-Japan Investment Grade CDS Index 114.0 -5.75 basis points.
• China Sovereign CDS 59.5 -6.0 basis points.
• China Iron Ore Spot 116.6 USD/Metric Tonne -1.1%
  
• Bloomberg Emerging Markets Currency Index 47.9 +.15%.
• Bloomberg Global Risk-On/Risk Off Index 54.6 +.09%.
• Bloomberg US Financial Conditions Index -.16 +5.0 basis points. 
  
• Volatility Index(VIX) futures 22.8 -.56%. 
• Euro Stoxx 50 futures +.60%.
• S&P 500 futures +.28%.
• NASDAQ 100 futures +.33%.

Morning Preview Links

Earnings of Note

Company/Estimate

Before the Open:

• (AYI)/3.02
• (CMC)/1.96

After the Close:

• (AZZ)/.79
• (JEF)/.51
• (PSMT)/.89
• (WDFC)/.98
  

Economic Releases

3:00 pm EST

• Consumer Credit  for Nov. is estimated to fall to $25.0B versus $27.08B in Oct.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Bostic speaking, German Industrial Production report, Needham Growth Conference and the JPMorgan Healthcare Conference could also impact trading today.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

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