The GRM (Government run markets) take center stage!

Hopefully in the future we will not have to talk central banks any more. But…right now…they are front and center with no end in sight to the trillions that are being printed. As the markets were swooning into a bear phase, a coordinated effort was hatched around the globe. By no coincidence, at the same time the fed sent out 3 fedheads to say there would be more QE if necessary, Japan ramped up QE to who knows how much, the ECB ramped up QE and promised “whatever it takes” and surprise surprise surprise, China announces a surprise rate cut even though they are supposedly growing north of 7%. My friends, there is no doubt in my mind that central banks are scared crapless of what markets might do if they were left alone. Since the fed admits buying trillions in bonds,we have to believe they are doing what Japan has admitted they are doing…and that is buying up not just bonds but stocks via the futures market. I would love to see Yellen answer that question under oath.

But that’s all noise. Markets continue to be pushed higher by central bank announcement after announcement. Friday was all about China. Maybe Albania is next. Markets remain stretched and extended way beyond the norm. At the same time, bullishness is off the charts which is usually a less-than-thrilling scenario. But easy money is easy money. We suspect maybe not this week as we have seasonal holiday strength but maybe into next week, we are due for a breather. The only other negative to bring up which has been out there forever is the small caps continue to lag badly. Again, that is a theme that has been going on for more than three quarters and expect that when markets do correct, it will be the small caps that lead down again just like they did in October.