Monday, January 11, 2016


He Who Knows All Things called last Friday.

"Don't ever do that again."


"Disappear for a week.  Do you see what happened?  Everything went to crap"

Well, I'm back and sure enough the Stock Market stopped it's horrendous six day slide and rallied at the close today.  Shanghai didn't, however, and everyone is now convinced that China is a disaster in the making...or one already once again the government proved that they are not quite ready for prime time.  Having received what they thought to be the imprimatur from the IMF in the form of a reserve currency designation, they decided to get cute and as we have mentioned in setting the "peg" for the Yuan against a basket of currencies instead of only against the dollar which the leadership believed would allow the Yuan to depreciate more rapidly and aid China's export economy.  It depreciated rapidly alright; it cratered, causing the Central Bank to engage in a massive struggle against this thing called "the Market" to get a grip on things immediately after agreeing to the "free markets" called for by the Fund.

Now a run on a currency is not always a bad thing but when it is caused not by technical factors but by a clear concern for the stability of a country as a whole, things get dicey.  Last week, things got real dicey and were made worse by the continued collapse of the commodities markets led of course by oil which continued it's downward slide by over 5% today.  What is about to start happening is the first in what will be substantial bankruptcies in the oil patch, the reality of which, though predicted, will trigger downward revisions in economic forecasts which will have the effect of decreasing economic expansion, which will...well, you get the picture.  Over the last few years the best prognosticator of economic performance has been the Atlanta Fed.  Their prediction for this year?  Well under 2%.  The economic and to reiterate, the political fall-out from such performance in this election year might well be earth-moving.  In any case, a fair reading of the tea leaves will lead one to realize that this economy stinks and this cannot be argued away with job creation as last month's growth greatly skewed to the age groups of under 24 and above 55.  In addition, the lack of any meaningful wage growth which leads me to believe that the real bell-weather is the labor force utilization number and that still stinks.  We are on a knife's edge and now, just when some positive thinking was growing concerning Europe, the refugee/immigration problem, as I am sorry to say I predicted broke out in the most ugly of manners throughout the continent over New Years followed by an almost imaginable breach of public trust by European leader led unfortunately by Ms. Merkel who may well lose her job as the result of completely misguided policies.  That occurrence could spell finis to any dreams to a Euro-led global recovery.

So I'm back, thinking I should have stayed away a bit more rather than having to comment on these gloomy goings-on.  But carry on we must, following the sound of the trumpet.  CHARGE!

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