Q3 GDP disappointed, coming in at 2.0% versus 2.7% consensus and Q2’s 6.7%. Not to worry…bad news is good news, right?  Not so fast. With inflation well above target, additional Fed stimulus is on the way out, no matter how much the economy sputters.  According to the Atlanta Fed, that might be quite a lot.

Because today is a day ending in a “y,” VIX immediately fell following the news, giving bulls a little hope. But there’s no getting around the fact that the GDP slowdown, when paired with high inflation, means stagflation is right around the corner.

continued for members…

The equity picture… VIX still holds the key to algo action, with the bounce off the purple TL resulting in a backtest of the broken red channel bottom.  VIX needs to do more – breaking out of the falling white channel again – if stocks are to break down. Despite problematic inflation, both the ECB and BoJ reiterated their commitment to their current low interest rate regime in the past 24 hours.  The ECB announced it will keep short rates at -0.50% and taper only slightly. Yet, the euro rose against the USD.And the BoJ not only kept short rates at -0.1%, but reduced its inflation forecast to 0% despite recent producer price data that reflects soaring inflation…

…impacted most strongly by the soaring price of oil……in ever-weakening yen.

Bottom line, DXY is testing the red TL from May.CL and RB are both declining this morning. I have a couple of appointments this morning, will wrap up this post and yesterday’s big picture in a couple of hours.