Let’s review this past devilishly whacky week to see if we can divine the way the world is turning and why the markets are churning. It was 2019’s worst week in stocks and, well, just about everything economic all across this crazily spinning planet. Volatility lifted its head back out of the water like Loch Ness’s monster while the citizenry took flight to treasury safe havens, bringing treasury yields down again to the five-year’s lowest point of the year. North Korea’s Rocketman returned to his rocketry, and the Chinese threw up their hands and ran as far from Mar-a-Lago as they could … or maybe they just threw up from too much chocolate cake.
The China syndrome is back
Most notably all over the world, bad news finally moved back to just being bad news, even as it arrived in cloudburst after cloudburst. Gold popped as money dropped and China flopped. Chinese exports fell 20%, outstripping the worst prediction four fold. The central bank of the billions of people of China mainlined major yuan jolts into the Xi dynasty’s tiring economy, and yet the Sino stock market fell off the mountain, taking a full panda bear plunge in one week. Apparently the nouveau riche Chinese ghost-city dwellers are wising up to all this easing and just realized talk of more of the same as far as the eye can see simply means the economy is finished more than it means refreshed hope waits on some distant horizon.
Trump talked and China walked. The best boast Trump could biggly bluster from his tweet blaster was that the stock market would rise again if China would only deal; China chose, instead, to cancel Chairman Xi’s second coming at Mar-a-Lago. Most market makers are saying the Chinese trade wars now have more downside than upside. Markets have priced in Trump’s repeated wafting of wistful hopes that a deal will be struck any day. His twittering about had the lightness of ether this week. If it happens that China does sign a grand bargain, the market money is already riding on that deal, so it won’t bring a lot more lift. If it doesn’t happen, on the other hand, the table cloth gets pulled out from under the Mar-a-Lago gold settings, and one can only hope all the crystal doesn’t shatter as Xi xings away without his chocolate cake.
Read the rest here: The Great Recession