The CPI report predictably pissed on the stock market's September parade yesterday. Remember how inflation was supposed to be "transitory" according to the Federal Reserve's enlightened board of governors? Remember that - "transitory".
A lot of retail investors are getting absolutely killed in this market. I know a few. When I speak to them, they are not pleased with the recent losses that they have experienced but they remain absolutely convinced that the Federal Reserve will once again ride to the rescue and flood the markets with zero percent credit. They don't seem to realize that they are living in a "sea change environment". They know only the world in which the dollar was the unquestioned reserve currency and that fact was absolute. The Fed is fighting against inflation but, more importantly, it is also fighting back very credible threats to the dollar's reserve currency status. It is a multi-front war and the Fed has only so much ammunition.
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