Wednesday, October 15, 2014


What happened today was butt ugly.  Things were not looking good at 8:00am but when some stinko economic news came in at 8:30, the slaughter was on.  The DOW at one point in the day was down almost 500 points, finally rallying at the end by 300 points or so.  But it was the ten year that was the shocker.  I've been around a bit and I can't remember any time when the yield on ANYTHING fell by 29 basis points in an hour.  By comparison, Europe was worse.  The ten year Bund now yields 75 basis points.  Bourses were down 6-7%.  Confidence is in the crapper and business outlooks have already been flushed.  The ECB can't do a thing and neither can the Fed which finds itself looking at a reversal of what it thought was to be a moderate recovery leading it to end QE III and to hint at tightening early next year.  As of today, no chance.

If there is a bright side to any of this there is apparently a dawning that maybe, just maybe, there is something a bit more wrong than can be cured by the Little Paulie Krugman solution of throwing more money at it.  I keep saying that there is something that is deeply structurally wrong Over Here and it is now clear that the problem is even more profound Over There.  Look, I refuse even at this point to begin making political arguments but anyone who thinks that the policies of this administration favor economic growth is an idiot.  What does the New York Times see fit to lead, right column, above the fold?  New law suits against the banking industry and of course the Gray Lady is the official house organ of this administration.  Insanity.  There is little confidence left in this administration and by week's end there will probably be none at all as the Ebola tale unfolds with the definite spin by all but the most loyal that it is another case of government incompetence.  Guys, you always allude that the Euros are far more "progressive" than us: well then do a Euro and halt flights from West Africa.  Do yourselves a favor.

I think tomorrow is a key day.  Either this thing slows or stops or else we are looking at another ten year event 20 days before a major mid term election.  What the effect will be I haven't a clue but the politics could be skewed in one direction or another and either way that is not good.  It's like interfering with markets; we have seen what interest rate management has accomplished: nothing--nothing good at all.  Let's see what happens.

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