What Is the FOMC (and China) Smoking?

The fear of rising U.S. interest rates has markets around the globe petrified, and what I want to know is what our Federal Open Market Committee is smoking that allows members to see things with such optimism?

The International Monetary Fund doesn't see it, the European Central Bank doesn't see and the People's Bank of China certainly doesn't see it. So, whatever Janet "Rebel" Yellen & Co. are smoking there in Washington, please pass it on.

Which begs the question: Why is Minneapolis Fed head Narayana Kocherlakota not partaking in the same stuff that Yellen and her gang are taking? Not only does he not think we need a rate hike here, he thinks we need further easing. Maybe he's the one who should be passing around whatever he's smoking, no?

Overseas, our quasi-Communist buddies in China have set up a "national team" of investors and brokerages to buy stocks and stem any further bleeding in markets there.

That's all well and good in a controlled country like China, but now they've taken things a step further. Starting today, Chinese authorities will reportedly make daily calls (and sometimes intraday ones) to the national team to get a report on what they've bought or sold during the trading session. 

Chinese markets will remain shuttered on Thursday and Friday for a holiday and big military parade celebrating the victory over Japan in World War II.

If they want to put their citizens in a good mood before the show, won't they have to put on some sort of "shock and awe" tomorrow to get their markets moving much higher? If so, how will they do it? Is their any ammo left in their arsenal?

If we believe that they'll find a way to drive their markets higher, should we be long a Chinese ETF, if only for an overnight trade? We'll find out in a few hours when they open for trading in Shanghai.

China's latest purchasing managers index data is getting the blame for today's global market beat-down. My question: Why isn't anyone paying attention to our own weak PMI, which fell to a two-year low due to weak orders and smaller-than-expected backlog gains?

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