Wall Street Fears Tariff War Coming from the Tweet Front

The President's latest tweet-attack on China has sent investors into an early May panic, as the VIX (aka "fear indicator") leapt to its highest reading since January.


Why all the panic?

The short answer is that more trade agreement "talks" with China will now be threatened as Trump equally threatened to more than double existing tariffs on Chinese goods.

As I've written elsewhere, these are mostly headline-driven market whipsaws-almost distractions.

The sad fact of the matter is that both China and the U.S. are already so over their skis in debt that these "trade-talk" spinners/headlines are missing the forest for the trees...

That is, when a tariff on Chinese "goods" is essentially just a tax on U.S. consumers and retailers, as the vast majority of American "goods" are simply, well: "Made in China."

No one wins a trade war, and the Fed is losing control of a lot more than just politics.

Read more »

Bad News: China’s REAL “Growth” Story sends Ominous Message…

The media cheerleaders are back at it again, this time giving us more good news out of China.

Such Chinese "good news" sends investor fears, and hence the VIX, to the floor:

Although China's growth in 2018 was the slowest since 1990, the gist of this recent media "rah-rah" stems primarily from China's Q1 "rising growth," driven entirely by its central bank's recent decision to ease banking reserve requirements, which it has done by allowing more debt "stimulus."

Folks, debt-based "growth" in an already debt-soaked China is not good news, it's merely a postponed hangover and thus postponed bad news.

But given the financial media's 24/7 misunderstanding of context, such longer-term perspectives are effectively non-existent today.

I've written elsewhere of the correlation between bad economic reality and false media hope in our daily headlines.

In the sad "new normal" of a world awash in $250 trillion of global debt created and maintained by a desperate cadre of "supportive" central banks, a key tool for keeping investor faith alive in the backdrop of this ticking, debt time-bomb is a perverse string cite of fictions masquerading as data and financial "news."

The recent "growth story" about China is no exception to this sad trend.

The recent "growth story" about China is no exception to this sad trend.

Read more »

“It’s All Gonna Blow Soon, Ain’t It?”

Not too long ago I was chatting with an Australian vineyard owner near Solvang, California.

He asked what I did for work. I told him.

Then he looked at me and said: "It's all gonna blow soon, ain't it?"

I drank his wine and said: "Yep."

Then again, I've been saying that for years...

For now, let's take a step back and consider our "interesting" economic landscape as we come up to our 120th month of an entirely debt-driven and central-bank created "market cycle."

Toward that end, I'll open with a metaphor -a device I do so enjoy...and it's the same one I offered to my wine owner.

The image I have is a beautiful little desert village with fruit stands in the streets, children running through sun-bathed flower beds, and yuppies driving blissfully about in convertibles listening to Michael Bolton's Greatest Hits.

The sun is shining, not a cloud in the sky. All is well, as far as the eye can see. And up there, on the distant horizon, sits a massive dam, behind which millions upon millions of gallons of deadly river water are pushing.

And somewhere, hidden among the walls of that great dam, is a group of very nervous folks - dangling from repelling ropes, with their stubby little fingers desperately plugging holes which are now appearing with increasing frequency.

The image I like to use includes Ben Bernanke, Alan Greenspan, Mario Draghi, and Janet Yellen scurrying from hole to hole to hole, shouting for more corks, fingers, or even silly putty to keep the great dam from, well, crushing them (and the village below) to death...

So where am I going with this?

Read more »

Fed Still Has Its Beer Goggles On with Recent Sloppy Pivot

Following Powell's recent capitulation to Wall Street and Washington in March this year, the financial cheerleaders are once again out in full force.

With the Fed's sudden pivot to be "patient" on further rate hikes, it's all "go-team-go!" for the sell-side media.

I just ran across a "breaking CNBC report" highlighting the results of an E-Trade survey.

It shows that more U.S. millionaires are turning bullish again.

Instead of the 44% bullish figure back in early Q1, today that percentage has risen to 66%.

Why the sudden "group optimism"?

The Fed handed Wall Street another long window of no-rate-hike "stimulus".

Now, let the post 2008 debt party and market bubble rage on!

Read more »