At 4.6%, November’s unemployment reached the highest level in 4 years while CPI has been locked in the same 2.4 – 3.0% range for 2 1/2 years. Had it not been for plunging oil and gas prices, it would also be at 4-yr highs.

“Inflationary slowdown” doesn’t exactly roll off the tongue. So, let’s call it what it is: stagflation. Will the stock market ever start to reflect the slowdown, or will it be content to bounce at the 50-day moving average again?

continued for members…

SPX and ES have yet to make new highs, and still owe us a backtest.

Meanwhile, VIX is breaking out of the falling purple channel yet again.

Were it not for the falling DXY, we’d see a much bigger reaction in equities.

Oil and gas continue to wield dramatic influence on markets, with RB dipping back into the giant white channel while the 10Y remains stubbornly elevated.

CL has done the same, though it has Fibonacci support just below current levels at 53.87.

There have been many dips below the yellow channel top over the past several years.They typically don’t last very long. But, this time could be different as supply/demand is a secondary consideration.

We have long expected Trump’s OPEC+ and big oil pals to help with inflation by suppressing oil prices. But, at what point will they say enough is enough? Prices are below the level where it’s profitable to pump any new shale oil – a bonus for OPEC+ producers if they can discourage US production. But, Trump is doing all in his power to encourage US production.

One thing is clear: keeping CPI in the 3% range means oil & gas prices must remain at or below current levels – particularly as the effects of tariffs are increasing.

And, there’s a lot riding on CPI remaining below 3%, including the 2s10s which is pushing 3 1/2 year highs.

Stay tuned.