Last update, yesterday afternoon, Dow futures were pointing to a minus 80-point open; as I type the Dow’s trading up 300 (retracing half of Friday’s selloff) in today’s regular session. Those key currency pairs I featured have flipped back to rally mode as well.

This is all amid Asian equities getting hammered (save for Hong Kong and So Korea essentially flat) overnight, with China closing down 8% (although China had some catching down to do when re-opening after the Lunar New Year week-long shutdown).

So why the rally in U.S. equities, and the notable turn in those key currency pairs? In a word, well, it’s the same word that explains the global equity rally we’ve experienced since last September, stimulus! China is throwing in the proverbial kitchen sink, and while, again, its equity markets are catching down for lost time, western markets, and currencies, are responding true to recent form.


Now, I’m certainly not complaining, it’s nice to see a relief rally after last week’s drubbing; I’m just reminding you that at this phase of the cycle (with interest rates at historic lows already, central bank balance sheets [and corporate debt] at record highs) — while we can certainly hope — when it comes to a real-economy impact, throwing more stimulus (read debt) onto economies that are already swimming in record levels of debt is akin to pushing on a string. However, when it comes to boosting asset prices there appears to be some bang yet to be had for the stimulus buck (debt). 

Definitely not a pool we want to be swimming in, at least not in the deep end, at least not for the time being…