As the CBOT skew index signaled the risk of turbulence ahead, this is exactly what we got yesterday. A weaker Chinese yuan and more fretting over local junk bond markets undermined sentiment early on Thursday, one day after the central bank implemented its own form of QE (urging the purchase of corporate bonds by government owned or controlled banks). Currencies gyrated widely with the dollar initially spiking on further Fed tightening expectations and signs of rising stress in EM markets as the commodities’ free fall continued and on subsequent weak EM markets (and China) in particular. That was until D. Trump had enough and came out of the wood making two statements (to criticize rising rates deliberately criticizing the central bank) and the other to say that the strength of the dollar is penalizing for the US. I’m not thrilled” the Fed is raising borrowing costs and potentially slowing the economy, he said in an interview with CNBC broadcast. “Because we go up and every time you go up they want to raise rates again. I don’t really -- I am not happy about it. But at the same time, I’m letting them do what they feel is best.” EURUSD turned tail on the news, erasing its losses to turn green on the day. Stocks recovered slightly on the news as well but closed at the lows. “This time is different” will ring a bell to many as a good book on previous financial crises, referring to one of the most dangerous mistake one can make to assume that what worked as a near cardinal rule in the past is to be neglected this time. Former Fed Chairman Bernanke joined Fed chair Powell in casting doubt about the predictability of the yield curve as a recessionary signal. We had doubts about Powell revisiting what has been a near cardinal rule, looking at the history of past recessions. Now that B. Bernanke joined the fray, we have less doubts... about our earlier doubts... Two charts from D. Rosenberg above. (apparently my blog editor wants all

Pics there now...) are telling a different story...than the most current narrative on the state of the US economy. In the bad will and dog’s diplomacy department, D. Trump tweeted yesterday that the EU Is `Taking Advantage' of the U.S. With the Google Fine. "I told you so! The European Union just slapped a Five Billion Dollar fine on one of our great companies, Google. They truly have taken advantage of the U.S., but not for long!" Trump said in a Twitter posting on Thursday, trying to raise the stakes on his upcoming meeting with JC. Juncker next week where tariffs on cars will be discussed. Perhaps the US also took advantage of Europe when it fined BNP and other European banks, multibillion dollar fines for trading with one of its “foes” (still in all legality with European laws). The bottom line is that tech giants have to start paying (billions) of recurrent taxes for conducting business in Europe. That was not new and Google price did not even move on the news. 

Markets are set to open lower on more saber rattling from D. Trump on trade.

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