Thursday, August 20, 2015


The DOW was down 358 at the close.  The ten year yield was 2.06%  Some dare not call it capitulation; some dare not call it anything else.  For the chartists, the 200 day moving average was crushed and the overall performance for the year turned negative.  I guess this is a big deal; I've never understood that it meant anything more than a measure of how much people don't like the market at a point in time rather than any galactic predictor of the future, but as I have said, I know nothing about stocks.  I do know markets, however, and at this point in time everyone of them  out there stinks.

There is a massive risk off trade going on in all markets for all instruments beginning with the emerging markets and anything relating to international business influence no doubt by the turmoil in China over the past couple of months.  In such an environment, silly stuff gets passed around.  One genius had the mess of today directly attributable to the markets' reaction to China's anger at the Yuan SDR being delayed which means the Chinese, in a hissy-fit will not reform their economy.  My son, any dope could have told you last week the IMF's plan for the Yuan was finis and as for Chinese reform, it will come when the Chinese believe that it will cause more good than harm.  Right now is not the time for the politicians who still have about a billion people to feed and for whom they must find jobs (it is a centrally-planned economy you know), especially after one of the nation's most favored "capitalists" almost blew up half a city of 11,000,000 as a result of trying to save on safety measures which is certain to earn him a bullet in the near future, to care whether or not Chrissie goes rogue on them.  It is the least of their worries.  But worries they have; they also have around $3 billion in foreign reserves which will certainly help them smooth out a few rough patches so all is not bleak.  What I expect we will see is a toning down of a good deal of the political rhetoric to which the past few years have given witness.  If you are going to act like Superman you had better be able to leap tall buildings at a single bound from time to time.  Lately, the third floor has gotten in the way.  This isn't a bad thing.  Keeping a clamp on that little fat lunatic in North Korea wouldn't be a bad idea either.  But make no mistake, we could be in for a really rough go for a while with issues of credit and liquidity arising across markets.  A big bust in one of the Asian markets could set the thing in motion.   As they used to say on a cop show years back: "Let's be real careful out there."

On a lighter note, the St. Louis Fed just released a study that, in their opinion, pointed out that "Quantitative Easing" really didn't have the effect intended and as a matter of fact had really very little effect at all.  But, sayth St. Loo, the Fed HAD to do SOMETHING which explains, I guess, why there is $4 trillion dollars sitting on the balance sheet, markets have been disjointed for the past six years and in the belief that the Fed had things under control, the politicians did NOTHING that was in any way useful save for a few hits here and there.  Get out of the "fix the economy business" you ninnies and restore some of the credibility that none...NONE of you world wide have any more.  Lose another 358 off the indexes tomorrow and you are going to need all you can get.

Oh, Tsipras resigned today and called snap elections in Greece for September 20.  If we didn't have the Greeks around for a laugh now and then, someone would have to invent them.

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