Wall Street’s Fear Gauge Lowest Since November 2019 Ahead Of The Fed, PPI Better Than Consensus

To gain an edge, this is what you need to know today.

Fear Evaporates

Please click here for a chart of CBOE Volatility Index .

Note the following:

The chart shows that VIX has fallen to the lowest levels since November 2019. VIX is also known as Wall Street’s fear gauge.
Fear has evaporated as market mechanics have taken over.
When market mechanics drive the stock market higher, VIX hitting a low is inline with pre-pandemic historical patterns.
From historical patterns, when fear completely evaporates, often some event comes along that causes the stock market to drop.
Producer Price Index (PPI) came better than the consensus but inline with The Arora Report analysis. Here are the details:

Headline PPI came at 0.0% vs. 0.1% consensus.
Core PPI came at 0.0% vs. 0.2% consensus.

We have been sharing with you for a while that inflation is coming down sharply in goods. We wrote, only two days ago:

In The Arora report analysis, since the U.S. is a huge importer of Chinese goods, deflation in China is helping inflation in the U.S. come down.

As we have been sharing with you, in The Arora Report analysis the problem with inflation is in services.
The FOMC rate decision will be announced at 2pm ET followed by Powell’s press conference at 2:30pm ET.
Ahead of the Fed, over the last month investors have bought stocks, bonds, and bitcoin aggressively by making a bet that the Fed will cut interest rates five times in 2024 with the first rate cut coming in March. We will be carefully analyzing the FOMC statement and Powell’s press conference to see if the Fed pushes back against investors running ahead of the Fed. Long time readers of The Arora Report know that this is the pattern of the momo crowd, that they always run ahead of the Fed. A vast majority of the time, the momo crowd has been wrong, but that does not stop them from repeating the same pattern again and again. The reason this pattern exists is that momo gurus’ real job is to push up the stock market in the short term, without any concern for the long term. Momo gurus disguised as analysts or strategists are very good at their job.  Momo gurus know that nothing excites the momo crowd more than rate cuts.
In The Arora Report analysis, the Fed is in a difficult position. The data from the Fed already…