After the dust settled from yesterday, the Chinese markets were steady and oil even bounced up to $30 a barrel, so the US markets largely followed, at least early on, but by the end of the day ( the final hour is always a tell) and with about 20 mins to go Art Cashin of UBS often gives the buy/ sell order balance ahead. Recent volumes have been very high so it is serious, and the 10%-20% fall since start of trading this year signal bear territory approaching. Definition of a Bear Market is greater than 20% falls. Also in the Bear condition the market sells on the short cycle peaks, and so often by end of the day the apparent pop back falls flat.
So today it was a feeble +110 point on the Dow with the S+P still at the critical bench level 1860. Next one down is 1740.
The interviews from the luxury at Davos were continuous, never ending, and ultimately all talk. I was conscious of the poor freezing souls trudging west a few hundred kilometres away - heavy snow and very cold in central Europe. It was amusing to see and hear the infamous Jamie Dimon of JP Morgan with soothing comments. How many hundred millions for him this year, and his staff, while extraordinarily the share price never complains.
Basking in reflected snowy glory was the female chief of one top Indian Bank gloating over the growth and prospects of India's industry ( compared to China) and no problem with coal and iron ore. Pollution will catch up with them also within 10 years, or sooner.
Trying to interpret the US markets there are several narratives.
A. US economy is sound but because of strong US dollar the manufacturing ( except cars) is in recession. Consumer confidence with caveat that most are aware the wealth 'distribution' is increasingly skewed and needs fixing. The US dream though is alive and well.
B. Currency fears and a move back to asset backed currencies may follow. You may be surprised to hear Iran is one of the strongest- sanctions have just been lifted so their support of terrorism ( just like Saudi) is factored into the current Middle East matrix. Trade sure beats war, but sadly the two seem to thrive together in the current capitalist ( no morality) system. This will change ahead.
C. That correction. It may still happen 20-30% or more to the Dow. Most acknowledge this but do not really like to talk about it.
D. Financial Collapse. Yes possible and may even be useful if likely changes are to enabled more quickly. The Global Currency ReSet is a sub text with some spooky views worldwide. Nevertheless it is a fact that the Kuwait Dinar at the time of the Iraqi invasion was over $3.50 USD. This was devalued to 0.05 cents USD during the 6-9 months of the war, and hundreds of millions of KD were 'acquired' by US interests, then re-sold and used for Clinton Surplus ( and other things) at $3.40 USD soon after. Operational Leverage.
There is a growing library of comment, hysteria, fact and fiction on option D. It is probably shrewd management to cover all options.
As an aside the recent abrupt 'announcement' of the huge ninth planet is a trifle odd do you not think. There is narrative that this data ( and its flight path) was held back and a research astronomer died in mysterious circumstances a few years ago although had all the material ready for release. So here we go twilight meets daylight and I seriously advise that over the next couple of years there will be a stream of releases which will rock the complacent, because sometimes social change on the scale required may require extreme events. This is not through fiction or fantasy or zealot biblical interpretation, but actually the workings of economics which after all, and despite their best efforts to prove otherwise, the acolytes of Economics concede that real life ( totality) is a part of their work, and that all is inter-connected.
Friday's US market will be fascinating.
Petrobas is offering a 100 year bond and is paying 11% annually from today onwards. It is currently discounted to $0.56 USD and falling. That is the state of Brazil. As they say ( and will keep on saying) 'It has a great future.'