US Stock Index Futures Rise on China…
“If the second largest economy in the world, right, says ‘we’re going to inject as much liquidity as we have since the financial crisis’, that is a big deal. So I think that is a message that PBOC’s sending that says like risk assets; grow your appetite for risk assets.”
This reminds me of last October when super Fed Hawk James Bullard puked out talk of QE 4 the minute US markets showed something impulsive to the downside. Turned out (as we noted at the time) that the Semiconductor element of that mini panic was entirely hype and the Dove in drag went away to gather himself, most recently coming back to the mic with his sharp beak and talons and that glaring look in his eyes.
Ha ha ha… now China panics in an effort to soft peddle the rational policy it enacted of allowing shorting of its ‘free’ markets. We called the ‘China allows shorting’ news non-fundamental hype on Friday and we call the ‘China eases’ news today hype as well. Though its implications could be felt well beyond a hype burst, if players are indeed compelled to “like risk assets” and to grow their “appetite for risk assets.”
The bottom line is that we are on a long journey toward losing confidence in these policy moles. Here in the US a cranky and sometimes malcontented website has dubbed the phase Peak Fed ©.
Bulls and bears are getting ground up during the process, which will either resolve up (manic acceleration) or down (cyclical trend change). But it is a process and by definition a process is “a natural or involuntary series of changes”. Believe it or not, the process is natural. In this case it is addressing unnatural things.
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