Everyone blaming the recent drop on tariffs. We have news for you. Obama had tariffs. Bush had tariffs. Everyone has had tariffs. Maybe the difference is that those tariffs were not announced with a bull horn. Maybe this is about going about it loudly. Maybe. We think markets are just doing what they were going to do and that is ping and pong. We are now in the pong.

Remember, markets topped out badly weeks ago. Markets put in a good near-term low 10 days later. Markets are now retesting. This is normal. Even more normal is that yesterday, they came after the good stuff as big leaders like Amazon, Boeing and the like were ripped. This is part of the process. BUT…the recent lows had better hold. A break below and we will be talking about heading towards the dreaded 20%. As the cards keep coming out of the deck, it is not out of the question. Stay tuned. Underneath the surface is much worse as European markets have been imploding. Much worse are countries like the important German Dax which has already broken lows. On top of that, many sectors hardly bounced while the NASDAQ/NDX went back to the old highs. Areas like housing, utilities, real estate, food, drugs, beverage, tobacco, household products, oil  &gas, energy all act like we are already in a bear market. Important indices like the TRANSPORTS and the NYSE act horrid.

We think there is a bigger issue than the tariffs, some of the issues we have written to you about. Just think that in the past few days:

The president announced tariffs.

The president suggested confiscating some guns without due process. No really. He said it.

The president intimated what Duterte (look him up) does to drug dealers (they are murdered) is a good idea. No really. He said this.

On top of that:

The president, along with RepubliCONS McConnell, Ryan and the rest RAISED federal spending and uncapped spending going forward. This is the opposite of what they campaigned on. In case you did not know, more debt is a higher tax because we end up paying for it.

Our new central bank dude, someone who is supposed to be a protector, said the massive debt and deficits were not short-term risks and also said he did not advocate balanced budgets.

And these are the conservatives? We think the bigger issue is that the Democrat leaders are now socialists and the Republican leaders are now Democrats. Feel better now?

In any case, we do not rationalize price. We pay attention to price and price is speaking loud and clear here. We will have the microscope out as price approaches the lows of February 9th. We think it will take a lot to take out the lows of that day but with so much margin and leverage and passivity (think that’s a word) in the system, anything is possible.