No Free Lunch

While a higher dollar might help mitigate inflation, higher interest rates are starting to bite. Both mortgage refinancing and housing starts and permits tumbled in April.

Futures tumbled about 5 points on the news.  But, even that was a problem, as SPX is perched precariously atop the critical support of its 2.24 Fib extension at 2703.62 (not exactly a random walk…)It should come as no surprise to readers that VIX has already begun its nosedive.Meanwhile, Deutsche Bank — the third largest bank in the eurozone with $1.8 trillion in assets and $40 trillion in derivatives — continues its meltdown, closing in on our target from Feb 7 [see: What is Deutsche Bank Trying to Tell Us?But, hey, VIX is off 8%!  Everything must be awesome!

Will investors algos even care about the stagnation which, abetted by inflation-driven higher interest rates, has ensnared the economy in its razor sharp talons?  Or, will a tumbling “risk indicator” and copious share buybacks be enough to ward off a correction?

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