It is obvious that the two countries are moving in opposite directions. That is why global investors continue to be long China and Short the United States.

These trends will only increase in strength over the long term. There will, of course be short and intermediate run corrections to this trend as prices get overextended, but rallies in the USD will continue to be seen as opportunities to go short. The US subprime recession theory is gaining in strength and government involvement will make the situation worse and the recession longer than it should be. Not only will they increase the amount of malinvestments in the US economy, but they are undermining the principles that capitalism is based on.

So we can count on the fed to ease another 50bps next week as they try to prime the pump to create another bubble somewhere else, but what the US will likely get instead is stagflation….