Back from China!

We are back from China. We will have our thoughts on China and the economy later in the week but first:

Earnings growth does not matter. Sales growth does not matter. GDP does not matter. Debt, we mean massive debt does not matter. Leverage, we mean massive leverage does not matter. Communist presidential candidates do not matter. Crooked presidential candidates do not matter. A presidential candidate who changes moronic stances every hour does not matter. All that matters is back to all that has mattered over the past several years and that is the maneuvers of a select few maniacal central bankers around the globe. We have already written to you on numerous occasions about what they have done. 0% interest rates going on a decade now with negative interest rates are becoming something of the new norm. It’s no longer the printing of trillions. It is the printing of tens of trillions. No number is too high! The fact is and it is our contention the only thing that matters to the select few is markets holding up or going up. Here is the latest money quote from Janet Yellen. That’s all you need to know that the next move is back to zero and the next move after that is QE4. Remember these people say and do nothing by accident. It is all planned out. It is all coordinated and it is all in concert. The fact is only a quarter point hike here in the US was getting world markets melting down thus they have come to the conclusion they have to roll it back or else. And the quote:

“Even if the federal funds rate were to return to near zero, the FOMC would still have considerable scope to provide additional accommodation. In particular, we could use the approaches that we and other central banks successfully employed in the wake of the financial crisis to put additional downward pressure on long-term interest rates and so support the economy–specifically, forward guidance about the future path of the federal funds rate and increases in the size or duration of our holdings of long-term securities. While these tools may entail some risks and costs that do not apply to the federal funds rate, we used them effectively to strengthen the recovery from the Great Recession, and we would do so again if needed.”

Look what happened as markets were being hit. Credit and the access to credit and debt was drying up. It is this access to credit and debt that keeps the game going. If not for this access to this credit and debt, all hell breaks loose. You don’t believe us? Then just ask yourself the question why do they have to continue to ratchet up the easy money? What possible reason is there to go to 20 trillion, 25 trillion, 30 trillion of printed money? It should be obvious that no number is too high as the bar keeps being raised. We continue to believe that at the end of this road, the longer and higher the easy money continues, the bigger the meltdown is going to be. As we have always told you, we have no idea from what point or how long it lasts or how bad it is going to be, we just know by precedent, it is going to end badly. All those trillions and we grow 1% here…maybe!

The good news is we are technicians first and the market continues to improve. In fact, we were somewhat amazed by Friday’s action in that Japan’s market is rolling over, European markets look like they’re rolling over and we opened up badly but the boys would have none of it. Markets reversed here and nicely.