Stocks Modestly Higher into Final Hour on Lower Fed Rate-Hike Odds, Earnings Outlook Optimism, Less European/Emerging Markets/US High-Yield Debt Angst

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) 21.6 -3.1%
• DJIA Intraday % Swing 1.44%
  
• Bloomberg Global Risk On/Risk Off Index 60.1 -.7%

• Euro/Yen Carry Return Index 148.40 -.3%

• Emerging Markets Currency Volatility(VXY) 10.6 -1.3%

• CBOE S&P 500 Implied Correlation Index 36.0 -3.9% 

• ISE Sentiment Index 105.0 -17.0 points
  

• Total Put/Call 1.01 -11.4%

• NYSE Arms 1.34 +38.1%

Credit Investor Angst:

• North American Investment Grade CDS Index 74.9 -1.9%
  

• US Energy High-Yield OAS 383.09 -1.2%
• Bloomberg TRACE # Distressed Bonds Traded 301.0 -2.0
  

• European Financial Sector CDS Index 88.4 -2.0% 
• Credit Suisse Subordinated 5Y Credit Default Swap 402.6 -1.9%
  

• Italian/German 10Y Yld Spread 190.0 basis points -4.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 119.5 -1.9%
  

• Emerging Market CDS Index 236.90 -3.8%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 27.32 +.79%

• 2-Year Swap Spread 34.0 basis points +.5 basis point
  

• TED Spread 12.75 basis points +3.5 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -6.75 unch.
  
• MBS  5/10 Treasury Spread  147.0 +1.0 basis point
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 518.0 +4.0 basis points
  
• Avg. Auto ABS OAS 62.0 +2.0 basis points
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 47.62 +.05%
• 3-Month T-Bill Yield 4.81% +1.0 basis point
  

• China Iron Ore Spot 129.5 USD/Metric Tonne -.3%
• Dutch TTF Nat Gas(European benchmark) 50.8 euros/megawatt-hour +.42%

• Citi US Economic Surprise Index 34.2 +1.8 points

• Citi Eurozone Economic Surprise Index 71.7 +4.1 points
  

• Citi Emerging Markets Economic Surprise Index 1.6 -2.5 points
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 224.03 -.03:  Growth Rate +.3% +.1 percentage point, P/E 17.7 -.2
• S&P 500 Current Year Estimated Profit Margin 12.40% unch.
  
• Bloomberg US Financial Conditions Index .20 +2.0 basis points
  
• Yield Curve -81.75 basis points (2s/10s) -4.5 basis points
• US Atlanta Fed 1Q GDPNow Forecast +2.50% unch.
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +4.30% unch.: CPI YoY +6.23% unch.
  
• 10-Year TIPS Spread 2.40 -2.0 basis points
  
• Highest target rate probability for May 3rd FOMC meeting: 70.3%(-5.6 percentage points) chance of 5.0%-5.25%. Highest target rate probability for June 14th meeting: 53.2%(-7.6 percentage points) chance of 5.25%-5.5%.
  

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 -83.3%(+.1 percentage point) from peak 7-day avg. of 1/9/22 - 1/15/22
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +49 open in Japan 
• China A50 Futures: Indicating -84 open in China

• DAX Futures: Indicating +63 open in Germany

Portfolio:

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

• Disclosed Trades:  None
  

• Market Exposure: 50% Net Long
  

Bear Radar

Style Underperformer:

• Large-Cap Value -.4%
  

Sector Underperformers:

• 1) Telecom -2.2% 2) Digital Health -1.9% 3) Retail -1.8%

Stocks Falling on Unusual Volume: 

• ACI, ZIP, RUTH, PRMW, IOT, NTES, FAF, EXAS, DG, GOOD, OUT, AMPL, GKOS, SUI, NOMD, BBIO, RUN, FMS, ENOV, E, EBAY, BDC, DVA, FVRR, BCO, TNDM, FNF, GH, CCRN, UCTT, ORA, PZZA, MRNA, MPW, DNLI, FIVN, RILY, TDOC, DPZ, SRCL, BROS, SHYF, FPI, MGNI, U, SPTN, BAND, W and LUNR
  

Stocks With Unusual Put Option Activity:

• 1) DLTR 2) VGK 3) FEZ 4) DPZ 5) RNG
  

Stocks With Most Negative News Mentions:

• 1) W 2) U 3) BROS 4) NKLA 5) TDOC
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth -.3%

Sector Outperformers:

• Semis +2.2% 2) Shipping +1.9% 3) Construction +1.9%

Stocks Rising on Unusual Volume:

• NEO, LUNG, LNTH, RELY, TMDX, PR, ACVA, CARS, TPIC, NVDA, CIVI, OPCH, EVH, ANSS, LNG, MATV, KRP, SNBR, MRVI, PWR, CPE, TASK, RETA and SHOO
  

Stocks With Unusual Call Option Activity:

• 1) PCG 2) CAKE 3) WW 4) DPZ 5) LNG

Stocks With Most Positive News Mentions:

• 1) TNK 2) NVDA 3) ANSS 4) OPCH 5) SNBR
  

Charts:

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

Tomorrow's Earnings/Economic Releases of Note; Potential Market Movers

Earnings of Note 
Company/Estimate 

Before the Open: 

• (CRI)/1.80
• (CM)/1.72
• (LAMR)/1.29
• (SSP)/1.06
  

After the Close:

• None of note
  

Economic Releases 

8:30 am EST

• Personal Income for Jan. is estimated to rise +1.0% versus a +.2% gain in Dec.
• Personal Spending for Jan. is estimated to rise +1.4% versus a -.2% decline in Dec.
• Real Personal Spending for Jan. is estimated to rise +1.1% versus a -.3% decline in Dec.
• The PCE Core Deflator MoM for Jan. is estimated to rise +.4% versus a +.3% gain in Dec.
• The PCE Core Deflator YoY for Jan. is estimated to rise +4.3% versus a +4.4% gain in Dec.

10:00 am EST

• New Home Sales for Jan. is estimated to rise to 620K versus 616K in Dec. 
• Final Univ. of Mich. Consumer Sentiment readings.
  

11:00 am EST

• The Kansas City Fed Services Activity Index for Feb.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Jefferson speaking and the Eurozone Consumer Confidence report could also impact global trading tomorrow.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running -4.5% Below 100-Day Average 
• 8 Sectors Declining, 3 Sectors Rising
• 41.6% of Issues Advancing, 55.1% Declining
• 43 New 52-Week Highs, 18 New Lows
• 54.9%(+.9%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 38.0 -2.0
  
• Bloomberg Global Risk-On/Risk-Off Index 59.6 -1.4%
  
• Russell 1000: Growth/Value 14,887.3 +.26%
  
• Vix 22.4 +.5%
• Total Put/Call 1.02 -10.5%
• TRIN/Arms 1.8 +83.5%
  

Thursday Watch

Night Trading 

• Asian equity indices are -.25% to +.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 118.75 -5.0 basis points. 

• China Sovereign CDS 69.0 -5.0 basis points. 
• China Iron Ore Spot 131.0 USD/Metric Tonne +.76%.

• Bloomberg Emerging Markets Currency Index 47.6 +.08%.
• Bloomberg Global Risk-On/Risk Off Index  60.6 +.2%. 
• Bloomberg US Financial Conditions Index .23 +5.0 basis points.
  
• Volatility Index(VIX) futures 21.9 -1.3%.
• Euro Stoxx 50 futures +.40%.

• S&P 500 futures +.46%.

• NASDAQ 100 futures +.89%.  

Morning Preview Links

BOTTOM LINE: Asian indices are mostly higher, boosted by tech and industrial shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed.  The Portfolio is 50% net long heading into the day.