Put Today In A Bottle and Cork It

Yes, we know: Today's amazing stock market rally might have been just a bear market rally. It might have been a short-covering rally that reflected the extreme pessimism among investors and speculators. Just yesterday, the market dropped sharply on a couple of big earnings misses, a meltdown in crypto, and disappointment among some investors that the red wave was more like a red ripple, though the Republicans are likely to have a majority in the House.

However, today's stock market rally was solidly supported by a significant drop in bond yields as investors concluded that today's CPI report for October confirmed that inflation has peaked and is likely to keep falling. The dollar also fell. The Fed may not lower interest rates any time soon, but it may get to the terminal federal funds rate of this monetary tightening cycle sooner rather than later.