Party On

China reduced interest rates overnight in an attempt to stave off the hard landing that will inevitably result from its previous pumping efforts, encouraging the market rally. Unfortunately the Chinese economists went to the same schools as ours, and seem to be just as insulated from the real world.

Chinese pumping created a bubble in commodity prices which has been deflating since the middle of last year. Now the TIPS curve has become inverted as markets are pricing in inflation near zero. Doubtless this will bring out the Bernanke pumps. Again. You have to laugh, these guys just have no clue.

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