Part II: The Real Catalyst for Recent Volatility

In Part I of this two-part series, I discussed the reasons that were popularly attributed to a recent market decline (in April). I indicated that despite my appreciation for the famous trader who voiced the list of catalysts, that when many reasons are given for market or stock activity, it usually indicates a lack of understanding for the one true catalyst. At the close of the report I promised to provide the real catalyst for recent volatility, so here it is – the third consecutive monthly uptick in inflation as indicated by the Core Consumer Price index. Sounds bizarre to some of you I’m sure, but the fact is that the market has reacted poorly to this data point more than once recently. That is because it threatens to raise Fed interest in a more rapid monetary policy tightening scheme. See my full stock market report – SPDR S&P 500 (NYSE: SPY), SPDR Dow Jones (NYSE: DIA), Powershares QQQ (Nasdaq: QQQ), iShares Russell 2000 (NYSE: IWM), Vanguard Total Market (NYSE: VTI), iPath S&P VIX (NYSE: VXX).

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