Look, I'm not even going to try to divine this one other than to say what happened today was about the worst thing that could happen.
Even with the continued sell-off in China, the equity market (which for the time being is all that counts) had a pretty good bid under it this morning helped by the late announcement in Beijing of the Central Bank's decision to cut interest rates and reduce the amount of required reserves from the banking system. The DOW opened up around 350 and traded in a good range for almost the entire day. Almost. In the final hour it crashed 500 points to close down 204 while the ten year gave up over 20 b.p. in yield. It was the worst possible news. The only way to interpret it was that the bounce was merely a signal to get out; a clear indication that confidence is shot. At the end there wasn't a bid...not a one. Max told me that his equity buddies couldn't believe that no company even tried a buy-back in an attempt to stabilize the company's stock. Not one. Disbelief.
Tomorrow will probably be even worse early on as Asia will undoubtedly react to the final hour rout in as negative a manner possible. The Central bank boys and girls have their annual Pow-Wow in Jackson Hole this weekend. They may have to move it up because somebody needs to be seen to be in charge right now. Il Duce is apparently in Vegas giving a speech on climate change--which used to be known as global warming--until some questions started to get asked. I'm all in favor of clean air, why, on a clear day you can see forever. A pure, sharp-as-can-be vista of economic destruction. Is there a leader in the house?
Tomorrow scares me but at least we will have a better idea where this is going.
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