Thursday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 112.25 -2.75 basis points. 

• China Sovereign CDS 67.75 -3.25 basis points. 
• China Iron Ore Spot 125.5 USD/Metric Tonne -.47%.

• Bloomberg Emerging Markets Currency Index 47.7 -.04%.
• Bloomberg Global Risk-On/Risk Off Index  64.2 +.7%. 
• Bloomberg US Financial Conditions Index .20 -5.0 basis points.
  
• Volatility Index(VIX) futures 22.3 +1.1%.
• Euro Stoxx 50 futures -.28%.

• S&P 500 futures -.41%.

• NASDAQ 100 futures -.56%.  

Morning Preview Links

BOTTOM LINE: Asian indices are mostly higher, boosted by energy 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 25% net long heading into the day.

Stocks Falling into Afternoon on US Policy-Induced Stagflation Fears, Rising Fed Rate-Hike Odds, Earnings Outlook Worries, Tech/Retail Sector Weakness

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) 20.8 +.2%
• DJIA Intraday % Swing .75%
  
• Bloomberg Global Risk On/Risk Off Index 63.9 +2.3%

• Euro/Yen Carry Return Index 151.05 +.74%

• Emerging Markets Currency Volatility(VXY) 10.5 -.7%

• CBOE S&P 500 Implied Correlation Index 36.0 +1.5% 

• ISE Sentiment Index 105.0 +4.0 points
  

• Total Put/Call 1.21 +21.0%

• NYSE Arms .96 -21.3%

Credit Investor Angst:

• North American Investment Grade CDS Index 75.8 -.5%
  

• US Energy High-Yield OAS 351.7 -2.0%
• Bloomberg TRACE # Distressed Bonds Traded 324.0 +30
  

• European Financial Sector CDS Index 88.1 -.28% 
• Credit Suisse Subordinated 5Y Credit Default Swap 398.3 -1.3%
  

• Italian/German 10Y Yld Spread 185.0 basis basis points +2.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 113.0 -2.5%
  

• Emerging Market CDS Index 237.5 -1.4%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 27. +.06%

• 2-Year Swap Spread 34.5 basis points -1.5 basis points
  

• TED Spread 13.25 basis points -3.25 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -7.75 -1.25 basis points
  
• MBS  5/10 Treasury Spread  154.0 +6.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 532.0 +7.0 basis points
  
• Avg. Auto ABS OAS 59.0 -1.0 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 47.7 +.6%
• 3-Month T-Bill Yield 4.84% +4.0 basis points
  

• China Iron Ore Spot 126.5 USD/Metric Tonne +.3%
• Dutch TTF Nat Gas(European benchmark) 47.1 euros/megawatt-hour +.9%

• Citi US Economic Surprise Index 37.6 -1.0 point

• Citi Eurozone Economic Surprise Index 59.4 -2.4 points
  

• Citi Emerging Markets Economic Surprise Index 9.1 +6.7 points
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 225.13 +.33:  Growth Rate +1.2% +.1 percentage point, P/E 17.6 -.1
• S&P 500 Current Year Estimated Profit Margin 12.34% -3.0 basis points
  
• Bloomberg US Financial Conditions Index .24 +5.0 basis points
  
• Yield Curve -89.75 basis points (2s/10s) -1.5 basis points
• US Atlanta Fed 1Q GDPNow Forecast +2.27% -53.0 basis  points
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +4.72% unch.: CPI YoY +6.21% unch.
  
• 10-Year TIPS Spread 2.42 unch.
  
• Highest target rate probability for May 3rd FOMC meeting: 66.3%(-6.9 percentage points) chance of 5.0%-5.25%. Highest target rate probability for June 14th meeting: 58.5%(-1.0 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 -61 open in Japan 
• China A50 Futures: Indicating +3 open in China

• DAX Futures: Indicating +8 open in Germany

Portfolio:

• Slightly Lower:  On losses in my medical sector longs and emerging market shorts
  

• Disclosed Trades:  None
  

• Market Exposure: 25% Net Long
  

Bear Radar

Style Underperformer:

• Large-Cap Growth -.5%
  

Sector Underperformers:

• 1) Utilities -2.0% 2) REITs -1.7% 3) Retail -1.6%

Stocks Falling on Unusual Volume: 

• AY, MNST, CWAN, RY, RYAN, AHCO, GO, SWX, RELY, ARE, EHAB, DIN, AAP, PUBM, ZM, CPNG, SKYT, AGO, LOW, WRBY, RVNC, UMH, EDR, SILK, CORT, WB, YOU, ESMT, TALO, FHN, MBI, EVA, AMBA, PWSC, MDRX, TSVT, TSVT, RIVN, EYE and XMTR
  

Stocks With Unusual Put Option Activity:

• 1) IMGN 2) AAP 3) ASHR 4) KSS 5) FSLR
  

Stocks With Most Negative News Mentions:

• 1) NVAX 2) AMC 3) EYE 4) XMTR 5) IHRT
  

Charts:

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

Bull Radar

Style Outperformer:

• Mid-Cap Growth +.1%

Sector Outperformers:

• Steel +3.5% 2) Gold & Silver +2.9% 3) Energy +2.3%

Stocks Rising on Unusual Volume:

• RETA, BGS, ISEE, DUOL, DY, SDGR, SRPT, AMPH, FSLR, DDD, RGNX, CARG, GOLF, JACK, AXON, FOUR, VTNR, RYTM, AMRC, CEIX, VVNT, SLRC, TWI, RYI, VRSK, SCHN and ITCI
  

Stocks With Unusual Call Option Activity:

• 1) CLNE 2) FSLR 3) BIG 4) GSAT 5) DUST

Stocks With Most Positive News Mentions:

• 1) RETA 2) SRPT 3) DUOL 4) GOLF 5) AXON
  

Charts:

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

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

Earnings of Note 
Company/Estimate 

Before the Open: 

• (BUD)/.85
• (BBY)/2.14
• (BIG)/-.77
• (BLUE)/-.25
• (BURL)/2.73
• (CNQ)/2.26
• (HRL)/.45
• (ICPT)/-.46
• (KR)/.90
• (M)/1.59
• (PDCO)/.61
• (SIX)/.17
• (SFM)/.37
• (SSYS)/.03
• (TD)/2.20
  

After the Close:

• (AVGO)/10.17
• (AI)/-.22
• (CHPT)/-.16
• (COO)/2.69
• (COST)/3.20
• (DELL)/1.64
• (HPE)/.53
• (MRVL)/.47
• (JWN)/.67
• (VSCO)/2.34
• (VMW)/1.96
• (AUY)/.06
• (ZS)/.29
  

Economic Releases 

8:30 am EST

• 4Q Non-Farm Productivity/Unit Labor Costs revisions. 
• Initial Jobless Claims for last week are estimated to rise to 195K versus 192K the prior week.
• Continuing Claims are estimated to rise to 1669K versus 1654K the prior week.
  

10:00 am EST

• The ISM Services Index for Feb. is estimated to fall to 54.5 versus 55.2 in Jan.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Waller speaking, Australia Building Permits report, weekly EIA nat gas inventory report, BofA Refining Summit and the BofA Animal Health Summit could also impact global trading tomorrow.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Morning Market Internals

NYSE Composite Index:

• Volume Running +10.5% Above 100-Day Average 
• 7 Sectors Declining, 4 Sectors Rising
• 49.1% of Issues Advancing, 47.4% Declining
• 42 New 52-Week Highs, 29 New Lows
• 54.2%(+1.3%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 40.0 -1.0
  
• Bloomberg Global Risk-On/Risk-Off Index 64.2 +2.8%
  
• Russell 1000: Growth/Value 14,856.6 -.35%
  
• Vix 20.6 -.4%
• Total Put/Call 1.03 +3.0%
• TRIN/Arms .92 -24.6%