by NAAIM Member Dexter Lyons

Bottom line: US stocks are under severe selling pressure as Cash becomes King (I am still 100% in Govt. T-Bill money markets waiting patiently).

As of Thursday,  January 07, 2015, SPY is Down 4.8% vs Down 0.1% (me) with a Maximum Draw Down (MDD) Loss of  4.8% vs 0.1% (me) since 12/31/15.

1) China’s economy is contracting faster than the communist government is reporting and the truth is being revealed as global stock markets decline in fear of global recessions. 
2) China spent $100 billion of their reserves in December (biggest monthly drop in reserves, EVER) and devalued their currency against the dollar in an effort to increase their exports and revive their weakening economy. 
3) China is trying desperately to devalue the yuan in an effort to make their widgets cheaper to potential buyers but Mexico’s currency fell sharply last year so foreigners are buying more cheaper widgets from Mexico.
4) China’s stock market is vastly overvalued and massive selling caused “circuit breakers” to trip the 7% stop trading rule several times this week as the Chinese Govt. loses control of its stock market.
5) China was supposed to lift the selling ban imposed on institutions (owning more than 5% of a company) on Friday but now they can sell no more than 1% of their holdings over a four month period.
6) The ECB tried to create 1% inflation with its massive ($1.4 trillion) QE program (like we did) but they only produced 0.2% inflation.
7) Just like in the US, the massive QE spending programs implemented by Japan and Europe go into bank reserves and not loaned out making the QE expansion ineffective and just puts more money in the pockets of the connected rich.
8) 4th quarter US GDP estimates are now at 0.7% which is substantially less than what the Govt. was shooting for. 
8) Boone Pickens (oil billionaire) said today that he expects oil to be above $70 this year and that an oil bottom in near ….. I hope he is right but I doubt it because I expect recessions to increase in 2016 which decreases oil demand driving prices lower. 
9) Amazon is down 12% since 12/29/15 and Apple is down 26% from its high on 5/22/15 as Big Money raises capital in anticipation of lowered earnings expectations. 
10) Gold (GLD) is up 4.6% since 12/31/15 as money moves to a perceived safe haven but the real safe haven is US Treasuries when things get really ugly (we are not there yet).

11)  If you do not have to be invested in this market, now is a good time to be on the sidelines waiting for the junk bonds to bottom and ride the wave higher when it does start to trend higher.

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