China sends markets into a tailspin

China fired a missile across the bow of the Trump Administration early Wednesday morning when news came out said Beijing was looking to cut back on buying US treasuries.

The Bloomberg headlines below sent US markets cratering:



The Fed's two special meetings today

The Federal Reserve Governors are meeting today under expedited procedure. This meeting was called Friday afternoon.

I didn’t notice if there were Black SUVs lining Liberty Street this weekend, outside the NY Fed offices.

After this hastening called special meeting Fed chair Janet Yellen will meet with President Obama and Vice President Joe Biden at The White House.

Now chatter on the Street is talking about possible bank bailouts in Italy, with Spain a close second.

But my intuition is telling me this has more to do with Deutsche Bank. The ECB with a backstop from the Fed may use the Italian banks the same way the Fed used AIG.

That is to avoid a panic by bailing out Italian banks and then funneling the money to Deutsche in the form of debt payments or derivative swap payments.

I believe the tell on this is the crowded trade last week in US treasuries. The yield on the 10-year fell more than 50 basis points this year from 2.25% into 1.68 range, with acceleration last week.

The smart money always moves first.

DB’s shares in the US were down 7% last week and for this year are down 34% despite a mid-March rally, which saw the price climb above $20/share.

It’s a guess on the agenda, but look to see how DB shares do this morning to get a better read on the meeting.

The smart money will know,

Q1 market run up almost complete

Ok the last day of Q1 2016 now has all major equities exchanges positive for the year, just as I predicted on Monday.

The window dressing was aided by Fed chief Janet Yellen on Tuesday with her announcement that rate rises will be “gradual.”

Yellen’s pullback from the December quarter point rates rise and her comments seem to say that April’s meeting is most likely “not in play,” as a few of Yellen’s cohorts were saying prior to her Tuesday comments.

So we now have a divided Fed that just two weeks ago voted 9-1 to hold rates steady. Tomorrow I’ll calculate the run up in stocks and bonds off of the Holy Thursday close to illustrate the Easter miracle. I have to say, so far, it is quite a resurrection in the markets.

The US markets have divorced themselves from any and all of the global concerns that took the markets down in January and beginning of February.

  • Oil goes down, markets up.
  • Europe goes down, markets up.
  • Asia goes down, markets up.
  • Bond prices go up, markets up.