Dear Markets and Investors,
That metallic taste on the tip of your tongue, that’s blood. The rapidly beating object in your chest, that’s your heart. The tingling sensation in your extremities, that’s panic. Panic, fear, blood, what a start to the new year. What I find most interesting about these events, is the real fear in the markets. For the first time, in a long time, the markets are scared. And they should be. The Fed no longer has their backs.
But that doesn’t mean, China for the short term, isn’t contained. To think that China can’t handle this, is foolish. Does this speak to a much larger internal problem that China is dealing with? You betcha. But they still have $3.3trillion in FX reserves. And they’d rather open that door again then open the mystery door and find out what’s behind it.
So what I’m saying is that the market reaction, although justified, will die down, and the Fed will come in with some very supportive language to help ease the markets. In the end, I expect a small rebound over the course of the next week or so. Look at this event as a wakeup call to get even more defensive.
The Klendathu Capitalist