China Lifts The Dollar Peg

"Yuan Unshackled May Strengthen China Shift to Domestic Demand," say Bloomberg.

I say, Hilarious.

Would you want your currency pegged to something that has just entered a multi-year bull market? I didn't think so. The Chinese may be greedy, but they aren't fools.

They are greedy because they knowingly entered into a Faustian bargain to be the producer to the world's consumer. This binary relationship is already starting to end badly. Their primary bankroll, Euroland, is on the ropes. Their primary consumer, America, is starting to crater. Their internal demand, regardless of what you are served in the press, is years away from picking up the slack.

I have one word for China. Overcapacity. Here's another. Implosion.

Here's another beauty from Bloomberg: "China Backs Obama With U.S. Treasury Securities Rising Another 3% To $900 Billion." I've got one word for this one too: PR.

It would be nice if somebody backed Obama, but this has nothing to do with him, his administration, or its policies. Buying treasuries is what China must to do survive their Faustian bargain. Will it work? No. Has our stimulus stimulated? No.

The futures are up on the Chinese Yuan news. Good. Get this market as high as possible. Again. One word. Implosion.