China is in terrible shape.

Essentially, the feelings about the economic turmoil in China is having its way with the NYSE and the Dow.

The Dow dumped over 1,000 points in the first five minutes of the market opening on Monday the 24th.  The numbers rollercoasted and the day ended at -588.

Nine “big” stocks today, including Walmart, Dupont and Apple, went down 20% on Monday.  That’s a pretty large chunk of cash in a rather disconcerting event.

So if you’re the Fed, what’s to do?

Janet Yellen raising your rates?  In September?  Some are saying — Barclay’s — that this plan may be pushed back to March of 2016.

Others, like ZeroHedge, are indicating there may possibly be a QE 4 in the offing.

From Tyler Durden:

Forget Rate Hikes: Bridgewater Says QE4 Is Next; Warns World Is Approaching End Of Debt Supercycle

That’s where we find ourselves now—i.e., interest rates around the world are at or near 0%, spreads are relatively narrow (because asset prices have been pushed up) and debt levels are high.  As a result, the ability of central banks to ease is limited, at a time when the risks are more on the downside than the upside and most people have a dangerous long bias.  Said differently, the risks of the world being at or near the end of its long-term debt cycle are significant.

Leading to the conclusion that “We Believe That the Next Big Fed Move Will Be to Ease (Via QE) Rather Than to Tighten“

Today meant: households just saw about $1.8 trillion dollars of wealth disappear.

And what about Mr Obama, his administration, and China itself?  Donald Trump said:

“I’m the one that says you better start uncoupling from China because China’s got problems, and they have big problems, and they’re bringing us down.”

The US is more dependent on China’s economy now than when Obama became president.  Our trade.deficit with China is on track to be more than double what it was in 2009.  US trade with China occupies a greater percentage of our total foreign trade than it did then.  Exports to China make up a greater percentage of our total exports than they did six years ago.  Chinese holdings of our Treasury Bonds have almost doubled since 2009, and direct foreign investment by China in the US has doubled under Obama.

“Experts” say that the US is staying at about a 2% growth scenario.  Some people say that’s a load of crap.  It’s worse.  Many are pointing their fingers at China for the entire schmeer.  Some people say that too is a load of crap, and can be traced back to George Bush and his TARP program, the beginning of the massive, massive bank and industrial bailouts continued and exponentially increased by Obama.

Some people say those entities should have been allowed to fail and, having done so, we would now be mostly out of our own fiscal woods and much more readily able to deal with China and Greece, in terms of strength and resiliency.

That said, what’s ahead?

I’m listening to Gordon Chang.

And he says: you ain’t seen nothing yet from China in terms of fiscal problems.  Further, the Chinese government is ill equipped to smooth things out.  Like because they’re, you know, Communists and all.  Which means their ability to “correct” is, well, not good.

In the meantime, Hillary says — in response — to increase capital gains.

Sure.

QE 4, here we come?

BZ