Is the VIX showing the Market’s Hand?

“Some very interesting action lately with volatility (or lack thereof). One thing’s for certain…the increased market volatility has investors feeling might uncomfortable. Traders? Not really, it’s a dream environment. Last year, the VIX was sporting a near alltime low of 11….now we see the fear index comfortably in the mid 20’s….and has been there for quite some time (50 MA of the VIX has been over 20 since Aug 16, 1007). We’ve seen recent attempts by the bears to rip this market up…but lately, it hasn’t materialized. Why is this happening? The fear is dissipating from the markets, and coincidentally the bond market is correcting the problematic inverted yield curve. With Fed Funds well under the 10 yr bond, the curve is normalized for the first time in many months….a steep curve forecasts steady economic growth…and it continues to improve. So, how does this relate to the lack of fear in equities? Basically, the markets have been fearful of the Fed…that’s right…FEARFUL OF THE FED….without any certainty (with all due respect to the limbo) as to ‘how low they will go’. It seems now, and confirmed by at least one Fed Governor…the FMOC is closer to done with their rate cuts….concerned about stimulating the economy TOO much, igniting out of control inflation. Rate cuts are great for the markets, but ONLY if you really know they are coming….let’s face it, this Fed has been as transparent as brick wall.”  from BigTrends NetLetter