Stocks shed over 1% yesterday, easily reaching our initial two targets and almost our third before being rescued. it was the biggest drop we’ve seen in quite some time. A little over an hour into the session, VIX decided it had had quite enough. It plunged 8.8% from its intraday highs…just because. And, SPX closed off only 0.6% — still an impressive accomplishment relative to the melt-up we’ve seen over the past several months.
The BoJ meeting was of no particular import. The focus was more on the eurozone, and the ECB’s potential reaction to its little inflation problem. Some are ready to talk taper, while Draghi is likely to continue pounding the table for more stimulus to provide a floor for the ECB’s growing pile of junk.
The focus will shift, now, to the Fed — which has its own, even bigger inflation problem. Traders know it, and they’re more than a little worried.
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