THE CENTRAL BANK PARTY GOES INTO OVERDRIVE
“CENTRAL BANK PARTY GOES INTO OVERDRIVE”
By Gary Kaltbaum
3/17/2016
garyk.com
@GaryKaltbaum
Fox News Business Contributor
Greetings all. Today we are headed to China for 2 weeks…a little bit of business and a lot of touring. We will check back in with you from time to time to tell you what we are seeing. But first, a few thoughts!
The following is a fair assessment of what central banks around the globe are doing. We left out Albania!
Since the low that we called on Feb 11-12:
Europe announced an extension and a raise of printed money to 1 trillion/year. On top of that, they are now going to buy up corporates and left room to start buying up equity markets. Negative rates continue to go more negative.
China just keeps on printing…keeps going into more debt… and continues to unabashedly (big word) announce that they are buying up their markets on any weakness. All this even though they are still growing 6.5-7%!???
Japan is printing to the tune of 700 billion/year…and yes, negative rates. They have also announced the buying up of their markets on any weakness.
Negative rates continue to go more negative in many areas. Our faulty abacus tells us there is approximately $10 trillion working with negative rates.
Where there isn’t negative rates, 0% rates pervade.
Sweden prints. UK prints. We lost count on who is printing.
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And now, Yellen eases. Yes…after a whopping tightening of a whopping 1/4%, Yellen now backs off doing anything. Oh…we know there is some implied bs about 2 rate hikes but the Knicks will get into the playoffs before another rate hike.
What one must understand is these geniuses are not even pretending any more to care about economies. The fact is…THEY CARE ONLY ABOUT MARKETS. It is the down markets that pull the curtains up on all the massive debt incurred. It is the down markets that cause them angst. It is the down markets that scares the crap out of them. You must remember that Lehman, Bear, Wamu, Wachovia and the rest did not go out of business. The markets put them out of business. So…DEFEND THE MARKETS AT ALL COSTS!
The recovery rally that started Feb 11-12 continued into yesterday. We have written to you about the improvement. We have told you about the “turning of the corner” of all the commodity areas that were a huge anchor for the better part of 18 months. Commodities are rallying for 2 reasons: first, they have been down huge. Eventually, 50-90% drops find lows. Second, our dollar is now breaking down. Dollar down…commodities up.
We now enter massive overhead resistance in the market where the real test occurs. Keep in mind, markets that go up in the face of declining sales and earnings are eventually, not a good thing. But a weak dollar can help that out.
Lastly, one of the outcomes of the “fed fakeout” is that gold continues to rally. Looks like it is breaking out of a very bullish pattern here. Stay tuned.