Exporting Inflation to China:
You might not think that China would want to help the U.S. export its inflation but that is exactly what is happening. Why? China has been the largest exporter of goods in the world since 2009 and their level of exports was increasing since way before then. The primary reason is because they are a low-cost producer. They have low wages and even use “slave labor” to keep costs low. This results in goods flowing from China to the U.S. and money flowing from the U.S. to China. If China were a capitalist country this would result in companies becoming wealthier and people having more money to spend locally and inflating their economy. It would also necessitate that the Chinese companies convert their U.S. dollars into local currency in order to be able to spend it. The exchange process would create a glut of dollars and a shortage of Yuan (aka. Renminbi). Based on the law of supply and demand, this oversupply of dollars should cause the Dollar to devalue on the world market and the Yuan to rise. But the government in China doesn’t want the Yuan to rise because that would make Chinese products more expensive and reduce exports and hurt their economy thus causing unrest and possibly revolt.
So what does a Communist government do to prevent inflation? They siphon off a good chunk of the profits and buy U.S. Treasury Notes with the money. This pads the coffers of the Chinese Government and creates an I.O.U. on the U.S. Government’s books… but as long as China doesn’t actually try to cash in the I.O.U. nothing happens. It is simply a debit on the U.S. account and all the extra printed money becomes an asset on China’s books. China is happy because its assets are growing, U.S. politicians are happy because they got to spend money on boondoggles that pleased their constituents (while lining their own pockets through “political contributions” from lobbyists) and the only people who are unhappy are those who worry about the growing debt to China.

Paul Harvey? Boy, you are old! :)

Hi @stillers

BTW, it's not shouting with me, it's emphasis. I learned from three decades of communicating directly to senior management of many firms that people many times (1) don't read what was written, I mean literally, they don't read it, (2) many times do not open links and if they do they read only the headlines and/or first para, and (3) miss the main points of what is written unless they are bolded or capitalized.

AGREE (but not shouting, meaning emphasis).
Too many times, especially when companies really started using pcs/laptops for all employees, that folks didn't seem to read as well as from printed text.
I still CAP some words for emphasis and more so will text messages so the full meaning is NOT missed...

Hey STIllers - Don’t change my words. I said relief bounce. You said relief rally. So, unless your reading in INVESTOPEDIA mentions specifically “relief bounce” don’t tell me I’m wrong. Bounces to me are the opposite of dips. As far as Goldman Sachs goes, it’s nice of them to hand out all that free analysis for we common folks. Kinda wonder what they tell their high dollar clients. Same advice?

@stillers said:
GoldmanSachs for one I trust......

This is where you lose me. GS knows how to make money for GS, but that does not imply that they give out their best proprietary information (or important guidance) to the general public. Nor does any brokerage house.

BTW, it's not shouting with me, it's emphasis. I learned from three decades of communicating directly to senior management of many firms that people many times (1) don't read what was written, I mean literally, they don't read it, (2) many times do not open links and if they do they read only the headlines and/or first para, and (3) miss the main points of what is written unless they are bolded or capitalized.

Event based markets are difficult to bet on, especially when the event is 2 weeks away. Small and micro caps are in red today. So, it is not full on risk, notwithstanding a decent up day in large cap averages.

Yep. Anybody’s guess how it will all play out. Not only the debt question, but Evergrande and a lot of other newsworthy issues. I’d expect a “relief bounce” in many markets lasting a day of two if / when the debt issue is settled. However, I still think the path of least resistance near term is down - if we’re talking about the major indexes. That’s not to say some individual stocks and sectors won’t do well.

In case anyone has NOT noticed this, the national biz media tends to get a wee bit overly excited about SMALL moves DOWN in markets. Break the 50 dma and there's probably gonna be a CNBC "Markets in turmoil" special coming pretty soon. Ring the registers!

I'm simply reporting on a level below the 50 that we haven't seen in quite a while. There is NOTHING definitive about what's happening. What you do with the info is your business. PERIOD.
I'll stop shouting in caps if you agree to do the same.

Interest rates on Treasury bills coming due in the next month are already rising to reflect the increasingly likely ( but still unlikely) possibility of default.

The survey asked the experts whether they agreed or disagreed with the following statement: “The current combination of US fiscal and monetary policy poses a serious risk of prolonged higher inflation.” If so, how strongly and with what degree of confidence.
Of the panel’s 43 experts, 38 participated in this survey, and the results indicate considerable uncertainty and differences in views. Weighted by each expert’s confidence in their response, 33% agree with the statement, 36% are uncertain, 26% disagree, and 4% strongly disagree. The short comments that the experts are able to include when they participate in the survey provide more details on different perspectives.