Mario Draghi of the ECB sent shockwaves through the foreign exchange and currency markets today He didn't deliver the stimulus traders expected The big question is, will Janet Yellen surprise the market by failing to raise rates? The ECB did slightly lower interest rates, and extended QE if it will be needed Draghi's goal is inflation He equates 2% inflation to "price stability", when prices in Europe are stable now The big divergence that everybody is trading on a tightening in the U.S. at the same time Europe continues to ease The reality is more likely to be the reverse If anything, the European recovery is just getting started, and the U.S. recession is just getting started As a result of Draghi's decision to hold off on stimulus, the euro was up more than 3% on the day The dollar was weak across the board The stock market, including the DAX, fell accordingly Both U.S. stocks and bonds experienced a selloff Cheap money has been fueling rallies all over the world and when the ECB did not deliver it triggered a selloff in the U.S. assets The Dow rallied over 2000 points off its September low based on rate hike expectations that did not materialize We also got a key reversal in gold Overnight it made a new low, but closed substantially above that level The euro is still weak, it is just not as weak as the market expected The best environment for gold when the weakest currency is the dollar I wanted to address Janet Yellen's testimony today responding to questions Yesterday, Yellen referred to Q4 GDP forecast consensus as 2-1/2% She did not even realize that on that same day the Atlanta Fed reduced their forecast down to 1.4% I think the real shocker will be that the Europea Q4 GDP will realize greater growth than the U.S. Yellen was asked about Citibank's recent projection that the U.S. will experience a recession in 2016 Obviously, she can't agree with the projection, as this runs contrary to the Fed's rhetoric Asked as a followup, what tools the Fed would use in the event we did experience a recession in 2016, Yellen responded that the Fed would all the tools it has always had She said, if we did raise rates, then we would lower them Plus, she said it could use the asset purchase program (QE) that "has worked so well in the past If QE worked so well in the past, we would not experience a recession in 2016 You can't call QE a success until rates are normalized and the balance sheet shrinks back down to pre-crash levels If the Fed finds that it has to launch QE4 in 2016 because it failed to reach "escape velocity" How many QE's does the Fed have to initiate before it admits that it doesn't work, and is actually impossible to end without a great deal of pain? This loss of credibility in the Fed will precipitate a dollar crisis Anther thing that was ignored by Janet Yellen and the press was the six-year low in the ISM number The market is focusing on the service sector, yet the most important jobs are the goods producing jobs Lat month, we got a higher than expected jump in the non-manufacturing number:59.1 This month we wend all the way down to 55.9, which is dangerously close to contraction If we get the service and the manufacturing sectors both in contraction, that will be a total recession, supporting Citibank's 65% probability forecast may look optimistic Since 2016 is an election year, a recession will not bode well for the Democrats' economic success narrative