The famous “Hodgepodge” ...

After yesterday’s risk-taking rocket ride the obvious reaction is to sit and watch for a reaction. Will traders take the opportunity to sell after yesterday’s strength? And if so is it profit-taking or simply an opportunity to get short?

Or is yesterday’s strength a sign that traders and investors are done pricing in double-dip recession potential?

Risk on: China leading PMI could be good thing for growth…

We’ve been strident about the idea that global growth decoupling from the US is a myth. The idea being the US consumer is still the primary demand engine for the world, and Mr. US Consumer becomes all the more important as European demand heads into its austerity shell. But today’s news has us wondering a bit about our stridency.

China’s PMI rebounding above the 50-level this month, surprising some analysts, which includes us. We’d like to chalk it up to “official” Chinese numbers and such, but China growth seems to be validated by the stronger than expected growth reported by Australia this morning, which follows on the heels of weaker than expected growth in Canada. Hmmm … Australia is closer to China and Canada closer to the US; that may have something to do with it.

How you know it is getting ugly out there: Paul Krugman.

“President Barack Obama, under pressure to bolster the U.S. economy, said on Monday he and his economic advisers are discussing additional steps to generate job growth such as more tax cuts for businesses.” (Reuters)

Officially, Paul Krugman is not one of Obama’s aforementioned economic advisers, but technically there may be a difference.

Paul Krugman, Keynesian worshiper through and through, is always arguing for government intervention and/or defending the current administration’s policies. That alone is frustrating enough. But reading his typically short-sighted economic “thought pieces” so graciously published in The New York Times can make your head hurt.

To QE2 or Not to QE2, That is the Question ...

Dong, dong, dong….as the hour of Big Ben’s speech this morning from Jackson Hole approaches, bets are being lined up as whether Mr. Bernanke will indeed rev up his helicopter for yet another strategic drop…

Action: Mr. Bernanke says yes, the Fed will embark on quantitative easing #2 (QE2).