We are off to one crazy start this morning!

The futures markets have gone wild, ostensibly led by China, which had a PMI of 53.1 for May and, even though that’s DOWN from 53.5 in April, it’s still positive enough to be called a “green shoot” and between that and a collapsing dollar, the futures are flying higher (priced in dollars). Since 2 am (now 7:30) the dollar has fallen 1.5% against the the Pound and the Euro and gold has rocketed as high as $990 while oil ran over $68 a barrel (2.5% rule), almost a clean double off the bottom (up 95% actually). Of course GM is going bankrupt and there is an Air France jet that is missing over the Atlantic (not looking good either) but none of that is phasing the pre-market bulls as our futures are up about 1.5%.

Yes the market is showing all the classic manic symptoms as it suddenly escalates over the past several days, completing a 5% move this morning off 8,200 (8,610 is the exact mark). Gone are the depressive negative views but whether the market is delusional or simply just no longer depressed remains to be seen. I’m amazed at this run-up ahead of 8:30’s Consumer Spending numbers – maybe “THEY” already know it’s going to be good or maybe “THEY” are squeezing everything they can out of last week’s momentum before we get somebad data that pushes the markets back into a depressive phase.

The action has been fast and furious early this morning. The Nikkei was at 9,600 at lunch, was jammed up to 9,677 at the close but then was jammed up to 9,740 AFTER the close. The dollar fell 1.5% since 2am (so far) as Geithner went to China, supposedly to support the dollar but heended up supporting the Hang Seng, up 4% todaywhich is interesting as it got a huge reaction but Chicago’s PMI at 34 (contraction) gotNO reaction last week)and now we are back to SEPTEMBER levels in China.

Amazingly, what Geithner said this morning actually makes my case that this whole optimistic house of cards may collapse (see Thursday’s post)because every country cannot depend on every other country to pull them out of recession and Geithner warned this morning that China needs torecognizeThat it can’t pull itself out of the slowdown by exporting even more goods to U.S. households, which are digging themselves out of debt. “The purchases…
continue reading