It’s Never A Problem Until The Market Says So

“IT’S NEVER A PROBLEM UNTIL THE MARKET SAYS SO!”

By Gary Kaltbaum
@GaryKaltbaum
garyk.com
Fox News Business Contributor

Good morning!

The title of this morning’s note was the same title we used back in 08…and it fits today. All the negatives that are now bubbling to the surface are only showing up because markets are down. All the deficits, debt, leverage, market interference and all that crap did not matter because markets cooperated. That has now all changed!

Our recent worries about a “dislocation” in the markets has come to fruition. As we write this, futures are down a whopping 600 dow points. We are stunned at the gaps to the downside we are seeing. No one can ever predict such happenings but we put 1+1 and got a big fat 2. On top of our comprehensive weekend report, we have a few other thoughts.

In the last crash, rates were taken down to 0%. We are already at 0%. This means the next move is going to be another round of money printing.

The economy here is not fine. Any recent numbers quoted are about the past. This market action is either telegraphing a recession or is going to be self fulfilling and cause a recession.

This is all on Bernanke. We have whined 1000 times to you that he created the housing bubble and when the bubble popped, he used the same elixir that caused the bubble in the first place to get things going again…but this time, in a way no one could ever fathom. This led to the rest of the lemmings around the world to follow suit. At least Yellen stopped the printing…but expect the printing press to start up again.

We expect the Fed to act, if not today, any day. It will start with a leak of “no fed rate hike” and lead to some of the doves floating another round of money printing. We are not so sure the markets will listen this time. We wish there was no Fed.

Part of our thesis was the massive margin and leverage again in the system. In fact, it is at records. This is a classic sign of trouble when the market turns down…and causes the dislocations.

We have absolutely no clue how this trades or finishes today. Markets are way beyond oversold and way beyond stretched to the downside. It would be normal to get a vicious rally of several hundred points. We actually think you will see multi-hundred point moves back and forth in a matter of minutes. It will get that wild. Be careful of those who claim the bottom on any rally back up. The market will be the final arbiter.

We are very worried about President Obama’s reaction. President Obama loves the creation of a crisis in order to solidify power. (EPA and OBAMACARE anyone?) We hope he does not overplay it.

This is why they invented tequila! Stay well and keep your wits about you.