Stocks Lower into Afternoon on US Policy-Induced Stagflation Fears, Fed "Behind the Curve" Worries, Dollar Strength, Tech/Consumer Discretionary Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Almost Every Sector Declining
  

• Volume:  Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 22.1 +4.5%
• DJIA Intraday % Swing 1.09%
  
• Bloomberg Global Risk On/Risk Off Index 60.2 -.4%

• Euro/Yen Carry Return Index 149.8 +.9%

• Emerging Markets Currency Volatility(VXY) 10.95 +1.7%

• CBOE S&P 500 Implied Correlation Index 38.2 +7.6% 

• ISE Sentiment Index 95.0 -8.0 points
  

• Total Put/Call 1.13 +10.8%

• NYSE Arms .94 -29.3%

Credit Investor Angst:

• North American Investment Grade CDS Index 76.5 +2.53%
  

• US Energy High-Yield OAS 375.26 -.72%
• Bloomberg TRACE # Distressed Bonds Traded 301.0 unch.
  

• European Financial Sector CDS Index 90.2 +2.1% 
• Credit Suisse Subordinated 5Y Credit Default Swap 404.91 +.6%
  

• Italian/German 10Y Yld Spread 190.0 basis basis points unch.
  

• Asia Ex-Japan Investment Grade CDS Index 117.8 -1.3%
  

• Emerging Market CDS Index 245.31 +3.2%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 27.15 -.09%

• 2-Year Swap Spread 34.0 basis points unch.
  

• TED Spread 15.0 basis points +2.25 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -8.0 -1.25 basis points
  
• MBS  5/10 Treasury Spread  153.0 +6.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 513.0 -5.0 basis points
  
• Avg. Auto ABS OAS 61.0 -1.0 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 47.4 -.44%
• 3-Month T-Bill Yield 4.81% unch.
  

• China Iron Ore Spot 123.8 USD/Metric Tonne -2.3%
• Dutch TTF Nat Gas(European benchmark) 51.0 euros/megawatt-hour +.5%

• Citi US Economic Surprise Index 37.5 -3.3 points

• Citi Eurozone Economic Surprise Index 68.7 -3.0 points
  

• Citi Emerging Markets Economic Surprise Index 2.5 -.9 point
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 223.97 -.06:  Growth Rate +.3% unch., P/E 17.7 unch.
• S&P 500 Current Year Estimated Profit Margin 12.39% -1.0 basis point
  
• Bloomberg US Financial Conditions Index .24 unch.
  
• Yield Curve -86.0 basis points (2s/10s) -4.25 basis points
• US Atlanta Fed 1Q GDPNow Forecast +2.75% +25.0 basis points
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +4.72% +42.0 basis points: CPI YoY +6.23% unch.
  
• 10-Year TIPS Spread 2.38 -2.0 basis points
  
• Highest target rate probability for May 3rd FOMC meeting: 69.3%(-2.4 percentage points) chance of 5.0%-5.25%. Highest target rate probability for June 14th meeting: 56.8%(+.9 percentage point) 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 -150 open in Japan 
• China A50 Futures: Indicating -205 open in China

• DAX Futures: Indicating +38 open in Germany

Portfolio:

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

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

• Market Exposure: Moved to 25% Net Long
  

Bear Radar

Style Underperformer:

• Large-Cap Growth -2.0%
  

Sector Underperformers:

• 1) Social Media -3.6% 2) Video Gaming -3.5% 3) Alt Energy -3.4%

Stocks Falling on Unusual Volume: 

• NICE, ON, CIB, STLA, ZUMZ, OUT, JD, NEO, BHP, BA, ACVA, MPW, PRMW, W, DVAX, TECK, NTES, EOG, BABA, BALY, BPMC, DINO, LITE, SEM, REPL, KT, U, ADBE, RUN, RYI, MATV, DBRG, FYBR, VIR, LYV, MDGL, BAND, INT, ADSK, SSP, LASR, ATSG and VICR
  

Stocks With Unusual Put Option Activity:

• 1) IEF 2) CNK 3) ROST 4) CTSH 5) LYV
  

Stocks With Most Negative News Mentions:

• 1) VICR 2) UPLD 3) NKTR 4) CVNA 5) ADBE
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Value -1.2%

Sector Outperformers:

• Shipping +.5% 2) Oil Service +.4% 3) Insurance -.2%

Stocks Rising on Unusual Volume:

• LUNR, UVE, KTOS, ZETA, EVER, MAX, BECN, GH, BYND, ALTR, CRC, OLED, VRRM, EGLE, IRTC and SPTN
  

Stocks With Unusual Call Option Activity:

• 1) IEF 2) CNK 3) ROST 4) LYV 5) CTSH

Stocks With Most Positive News Mentions:

• 1) KTOS 2) CING 3) UVE 4) NVTS 5) ALTR
  

Charts:

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

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

Earnings of Note 
Company/Estimate 

Before the Open: 

•  (AES)/.46
• (FSR)/-.38
• (FUBO)/-.57
• (ITRI)/.09
• (TREE)/-.34
• (NE)/.54

After the Close:

• (AAON)/.56
• (BMRN)/.39
• (GRPN)/-.36
• (OXY)/1.83
• (RRC)/1.22
• (TREX)/.22
• (UHS)/2.97
• (WDAY)/.90
• (ZM)/.82
  

Economic Releases 

8:30 am EST

• Durable Goods Orders for Jan. is estimated to fall -3.9% versus a +5.6% gain in Dec.
• Durables Ex Transports for Jan. is estimated to rise +.1% versus a -.2% decline in Dec.
• Cap Goods Orders Non-Defense Ex-Air for Jan. is estimated unch. versus -.1% decline in Dec.
  

10:00 am EST

• Pending Home Sales MoM for Jan. is estimated to rise +.9% versus a +2.5% gain in Dec.
  

10:30 am EST

• The Dallas Fed Manufacturing Activity report for Feb. is estimated to fall to -9.5 versus -8.4 in Jan.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Jefferson speaking, Eurozone Industrial Production report, Mobile World Congress, Morgan Stanley Energy/Power Conference, Deutsche Bank Media/Internet/Telecom Confrence and the (HSIC) investor meeting could also impact global trading on Monday.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Morning Market Internals

NYSE Composite Index:

• Volume Running -7.4% Below 100-Day Average 
• 11 Sectors Declining, 0 Sectors Rising
• 12.8% of Issues Advancing, 84.8% Declining
• 16 New 52-Week Highs, 32 New Lows
• 53.5%(-4.2%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 36.0 -2.0
  
• Bloomberg Global Risk-On/Risk-Off Index 60.1 -.5%
  
• Russell 1000: Growth/Value 14,844.2 -.64%
  
• Vix 22.7 +7.4%
• Total Put/Call 1.18 +15.7%
• TRIN/Arms 1.18 -12.0%
  

Friday Watch

Evening Headlines

Bloomberg:      

• Australia’s Resurgent Public Wages May Add to Rate-Rise Pressure.
• Asia Stocks Eke Out Gains After Jittery US Session: Markets Wrap.  
• Oil Extends Gain for a Second Session Ahead of US Inflation Data.
• Home Lenders Hunt for Ways to Make 6% Mortgages More Attractive.  
• Where to Invest $1 Million: Rob Arnott Says Stock Slump ‘Far From Finished’.
• First DeSantis Took On Disney. Now He’s Coming for Wall Street.  
• Bankman-Fried Prosecutors Allege Plot to Shape Crypto Policy.
• Jerome Powell’s Worst Fear Risks Coming True in Southern Job Market.
• Onion Shortage Threatens a New Chapter in World Food Crisis.
  
• US Mortgage Rates Climb for Third Straight Week, Reaching 6.5%.
  
• Dimon Says the US Economy Is Facing Some ‘Scary Stuff’ Ahead.  
• Carvana Reports Wider Loss as Used-Car Sales and Prices Fall.  
• Thomas Lee, Billionaire Private Equity Deals Pioneer, Dies at 78.  
• The Ranks of 401(k) Millionaires Are Shrinking.  
• How a Toxic Train Crash Brought an Ohio Town to a Halt.

Wall Street Journal:

• America Is Losing the ‘Epic Battle’ Against Bird Flu.
• Faculty Pressures Stanford to End Bias-Reporting System.
• The Conflict in Ukraine Offers Old—and New—Lessons in 21st-Century Warfare.
• U.S. Amps Up Troop Presence in Taiwan.
• Train-Car Wheel Bearing Overheated Before Ohio Derailment, NTSB Finds.
• A Bigger Subsidy for Risky Mortgages. The housing lobby wins again, but taxpayers could lose in a recession. 
• Harvey Weinstein Sentenced to 16 Years for Sex Crimes in California.

Fox News:

• Chaos erupts during embattled Democratic attorney Kim Gardner's press conference.

CNBC.com:

• Warner Bros Discovery revenue misses as media giant posts big loss.
• Block misses on earnings but beats on revenue, gross profit.
• Jamie Dimon says the Federal Reserve has ‘lost a little bit of control of inflation’.
• Meet the $10,000 Nvidia chip powering the race for A.I.
• A year into the war, Ukraine and the West prepare for the biggest reconstruction since World War II.
• Adobe slips on report saying DOJ plans suit to block $20 billion Figma deal.

MarketWatch:                 

• Opinion: The stock market’s rally was a head fake and the smart money now is with the bears.
  
• Unity Software stock slides nearly 20% as mobile-ad spending dries up and annual forecast weighs.
  
• Nvidia’s stock-market hot streak is far from over, according to Wall Street analysts.  
• After grim fourth quarter, investors face worst year for earnings since 2000 by this measure, says UBS.  
• 87% of Americans are concerned about the economy, survey finds.

Zero Hedge:

• SBF Consultant Advised "Giving To A Lot Of Woke Sh*t" According To New Indictment.
• 'Lunatic' Forewoman In Trump-Georgia Case Shocks Media With Overt Bias, Trump Lawyers Pounce.
• Greenwald: NYT Finally Admits "The International Community" Does Not Stand With US On Ukraine.
• JPMorgan Says Staley-Epstein 'Snow White' Emails Don't Prove That Minors Were Abused.
• Are Reparations Part Of The American Rescue Plan? Cities Say Yes And Plan To Use Federal Funds To Support Reparations Efforts.
• The US Housing Recession Is The Canary In The Coal Mine.
• Escobar: Putin's "Civilizational" Speech Frames Conflict Between East And West.
• Explosions In Iranian City Which Hosts Nuclear Facility, Air Defenses Activated.
• Toxic Wastewater From Ohio Train Derailment Headed To Texas.
• Buy high, sell low frustration is huge.
• "Colossal" Tidal Wave Of New Container Ships About To Strike.
• Retail Investors' Most Popular Stocks Of 2023 So Far.
• US stocks finished a choppy session in the green after reversing the initial data-induced losses - Newsquawk Asia-Pac Market Open.
• What Do These 10 Crime-Ridden Cities All Have In Common?
• Former Pharma Exec Charged With Insider Trading Around Government's $765 Million Pandemic Loan To Kodak.
• US Legislators Introduce Bill That Would Prohibit Creation Of An American CBDC.
• JPM's Delta-One Desk Answers The Two Biggest Questions In The Market Today.
• More Than 1,700 Flights Canceled As Major Winter Storm Engulfs Much Of US.
• Stocks firmer after hot labour market data and PCE revisions shrugged off - Newsquawk US Market Wrap.
• 0DTE Call-Buyers Rescue Stocks From CTA-Slam, Bonds Bid.

TheGatewayPundit.com:

• JUST IN: White House Says Biden Has No Plans to Visit Ohio Derailment Site, Despite Having Plenty of Time to Visit Ukraine.
• CONFIRMED: As We Suspected All Along, New Video Proves Capital Police on January 6 Started Firing on the Innocent Crowd Without Warning and Against the Law, Injuring Numerous Individuals (SHOCKING VIDEO).
• Elon Musk On When People Will Admit COVID Response Was A “Scam” – “It’s Coming”.
• JEROME CORSI: Obama Went After General Flynn Because He Was a Risk of Indicting Him and Hillary for High Crimes and Misdemeanors.
• Hunter Biden Misses Midnight Deadline to Turn Over Business Records to Oversight Committee – Subpoenas Coming (Video).
• Hollywood Star Mark Wahlberg Says Faith “Not Popular” In His Industry – But God “Came To Save The Sinners” (VIDEO).
• “Xi Jinping and Putin Know, There Are No Consequences Under the Joe Biden Presidency” – Kash Patel on Why the Word “Nuclear” Is Now in the Mainstream.
• Jeffrey Sachs: UN Must Investigate Nord Stream Bombing and “Bring Perpetrator to Justice”.
• FLOP: Nikki Haley’s Campaign Rollout Has Negligible Impact On Support.
• NY Times Editorial Board Member Questions Free Speech on Internet: ‘I don’t think we can allow it to go on’ (VIDEO).
• Game’s Up! MAGA 20 Want the Receipts for $113 Billion in Taxpayer Dollars Laundered Through Kiev.

The Epoch Times:

• Ottawa ‘Very Concerned’ About Leak of CSIS Documents on Election Interference: Trudeau.

Twitter: 

• @C_Barraud - US #Housing Market Posts $2.3 Trillion Drop, Biggest Since 2008 - Bloomberg. (graph) 
• @ClayTravis - The NBA all star game crashed to an all time viewership low of just over 4 million people. Adam Silver allowed woke ideology to destroy the NBA’s brand.
• @DC_Draino - Wait what’s this? New body cam footage from J6 w/MPD discussing how “they set us up”? “Let them take the [Capitol]” This is why they don’t want more J6 footage released The fingers will all point back at Pelosi & her staff secretly weakening security. (video)
• @ReOpenChris - Dr. John Littell KICKED OUT of Sarasota Memorial Hospital Board Meeting after testifying to the effectiveness of Ivermectin to treat Covid-19! (video)
• @songpinganq - China displays faces, names, I.D. No., addresses...of persons, who're on the blacklist of #SocialCreditSystem, on the indicators of bus stops, for everyone to see to shame them. (video)
• @2022_Lockdown - Long rows of large empty parked trucks. Apparently, there is little to transport. Not a good sign for China's economy and Chinese workers. (video)
• @TomFitton - Why have we been maintaining biolabs in Ukraine for 20 years?! (video)
  

OpenVAERS:

• VAERS US COVID Vaccine Adverse Event Reports. 936,483 Reports(+1,783 from prior week) Through February 10th, 2023.
  

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.

Night Trading 

• Asian equity indices are -.25% to +.50% on average.

• Asia Ex-Japan Investment Grade CDS Index 115.75 -3.0 basis points. 

• China Sovereign CDS 67.5 -1.5 basis points. 
• China Iron Ore Spot 130.0 USD/Metric Tonne +.2%.

• Bloomberg Emerging Markets Currency Index 47.62 +.01%.
• Bloomberg Global Risk-On/Risk Off Index  60.8 +.6%. 
• Bloomberg US Financial Conditions Index .22 -2.0 basis points.
  
• Volatility Index(VIX) futures 21.4 +.13%.
• Euro Stoxx 50 futures +.52%.

• S&P 500 futures -.15%.

• NASDAQ 100 futures -.32%.  

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 mixed and to rally into the afternoon, finishing modestly higher.  The Portfolio is 50% net long heading into the day.