China

I was in Dothan Alabama yesterday where it was 78 degrees and spring was in the air!

We talked about the potential geopolitical possibilities over the last couple weeks that could knock this market for a whammy, with Iran as the most likely culprit, but yesterday proved that you can't predict when some exogenous event will come along that you didn't forsee. The crack in the Chinese market night before last was supposedly the catalyst to yesterdays move. My first day trading foreign exchange was the stock market crash of 1987 and this time seems markedly different. Stocks were then trading at a 29 multiple of earnings, significantly higher than where todays market is. The market that year ended higher and you had a fantastic year if you bought stocks, not sold them during that few days of pain. We will see if that proves to be true this time.

One of the most interesting observations about yesterday was the fact that gold and silver got hammered as well. It was as if the world saw a slowdown in China as a catalyst or at least a first whif of deflation. They need to go back to their economic textbooks to see that inflation is a monetary phenomenon, not a growth phenomenon. In the short run, that view, while correct would not have made you any money though. We will see what today brings. Back at my desk and ready to capitalize on some opportunities as they present themselves.