• Will markets stabilize and rally tomorrow?

"One more thing." --Lt. Columbo

The focus of the markets turns to the European Central Bank meeting, out of which policy will be announced tomorrow at 7:45 a.m. followed by a Mario Draghi press conference 30 minutes later.

The consensus doesn't expect further monetary easing, but it does anticipate hearing from a dovish Draghi, who may indicate that the ECB will do more in the future (including asset-backed-securities quantitative easing and broader-asset quantitative easing) if economic growth slows.

And growth is slowing in Europe -- as evidenced by a continued weakening in data (especially of an Italian and German kind), tame inflation (below targets) and pressure from sanction issues that are denting confidence and business activity.

If all goes according to script (above) and Draghi explains that the ECB intends to utilize all tools at its disposal aggressively, markets will stabilize and have a chance to rally back a bit.

• Thanks again for reading my diary.

Thanks again for reading my diary and enjoy the balance of the week and weekend

I am off to Lenox, Massachusetts, for some Yo-Yo Ma at Tanglewood and some golf.

Thanks again for reading my diary and enjoy the balance of the week and weekend!

And don't forget a special prayer at your house of worship for buddy/pal/friend Uncle Vinnie.

• Drop in crude, reduction in CRB, possible triple bottom in yields.

The recent drop in crude oil prices is an effective stimulant to personal consumption expenditures. So is the reduction in the CRB Index.

These (combined with a possible triple bottom in yields) are some of the reasons why I have expanded my short bond position today.

• Run, don't walk, to read about the Fed's war on capital spending on Zero Hedge.

The Fed has declared war on capital spending (hat tip Zero Hedge).

• Call volume remains high in the name.

Despite the continued free fall in Ocwen's (OCN) shares, call volume remains high.

I mentioned large volume yesterday.

Today  I see over 8,000 contracts in each of the January 2015 $30 and $40 calls.

• Here are his musings this afternoon.

Mo' Cashin:

Traders a little skittish. Strange dip on dollar/yen is followed by strange tick in gold, appearing to go from up $23 to unchanged then back to up $22. On alert for glitches.

• Does the move lower in bond yields today represent a triple-bottom?

The question I ask myself today: Does the move lower in bond yields today represents a triple-bottom in yields?

I certainly hope so!

• Down.

A big reversal in bonds today, as the iShares 20+ Year Treasury Bond ETF (TLT), which was up $1, is now down slightly on the day.LONG TBF

• Here are his musings at midday.

Midday musings from Sir Arthur Cashin:

While U.S. media remains focused on Ukraine/Russia, European closes look elsewhere. In Dow equivalent points: Portugal -667; Italy -442; Greece -430; England, Germany and France all off about 100 points. Draghi must address at ECB tomorrow.

S&P continues to shuffle between support at 1911 and resistance at 1926/1929.

Run rate at 12:30, projects to an NYSE final volume of 720/800 million shares.

• As promised.

Here is my follow-up to Jim "El Capitan" Cramer's suggestion that I might explain why 2014 is different than 1989, when the UAL Corp. leveraged buyout was aborted, and why it is not a given that this year's stock market might fall in reaction to the abandoned M&A deals of Sprint (S)/T-Mobile US (TMUS) and Twenty-First Century Fox (FOX)/Time Warner (TWX) as deeply as it did 25 years ago.

There is always a temptation for talking heads (myself included) to make simple observations and conclusions, as it makes for exciting press and exposure.

My cautionary remarks in "UAL Redux?" could have been taken incorrectly, and my intention was not to be sensationalistic. What I meant to suggest is not that the market would fall 7% to 10% as it did in 1989 but rather if history rhymes, the failure of the two takeovers could produce some market indigestion.

As I have written in the past, there are ample reasons to be concerned that the markets are somewhat overvalued.

Many of the conditions (especially of a monetary kind) that led to the UAL buyout being terminated are not apparent today.

The most important difference is that back in 1989 monetary conditions were extremely tight: The yield curve was inverted, the condition of the junk bond market was tenuous, and prices were under extreme pressure. By contrast, today (as seen in the chart below) monetary conditions are extremely easy, and the yield curve is positively sloped.

Moreover, while junk bond yields have backed up, they have declined only modestly relative to the rally in prices and still remain at near-record absolute yields.

The second difference is that the Twenty-First Century Fox/Time Warner deal isn't even being financed with high-yield bonds; it is being financed by cash and stock. UAL was all junk.

The third difference is that the regulatory environment today under a Democratic administration is different than it was under Bush's Republican administration in 1989.

Finally, monetary conditions were being tightened aggressively back in 1989, even before the UAL buyout was announced. The yield curve was already inverted, and rates were much higher than they are today.

By contrast, in August 2014, interest rates are at or near record low levels (at most maturities) and are not likely to rise by much in the period ahead, thanks to the kindness of the world's central bankers.

Jimmy, thanks for the advice to clarify why the markets are likely behaving better than expected today.

The reality is that the conditions in 2014 are far different than in 1989.

• Stay tuned.

Jim "El Capitan" Cramer just suggested to me via email that I should craft a column on why 2014 will likely be different than the 1989 mini market meltdown precipitated, in part, by the abandonment of the UAL Corp. leveraged buyout.

Jimmy has a wonderful idea, and he is 100% correct that conditions in 2014 (economic, interest rate, etc.) are indeed different than 25 years ago.

Since I will be out on vacation starting tomorrow morning, I will shortly have a quick response and column out on this important subject and Jimmy's clear observation.

As always, thanks "El Capitan."

• The talking heads, that is.

Case in point: There was a universal view in the business media that Twenty-First Century Fox (FOX) would move mountains in its attempt to acquire Time Warner (TWX).

Lesson learned?

Again.

• Here's the plan, in short.

I am looking to reshort IBM (IBM), add to my Coca-Cola (KO) short and reestablish my index shorts on the next ramp higher.

I remain cautious and expect the S&P 500 to range between 1700 and 1950 over the balance of the year, with a possible close at year-end 2014 somewhere in the middle of that range.

• Here are his early-morning comments.

Sir Arthur Cashin's early-morning musings:

On opening thrust down, S&P hits 100 day moving average and bounces (big hat tip ¿ Barry Habib). Now we have today's line in the sand. Also watch ten year level of 2.42, if it gets there.

• So far.

I purchased Monitise (MONI.L/MONIF), Citigroup (C), Bank of America (BAC) and ProShares Short 20+ Year Treasury (TBF).

I covered my PowerShares QQQ (QQQ) short.

• I'll say it again.

For emphasis: Trade, don't invest -- for now.

• Here is the firm's summary.

Below is a good earnings recap from Goldman Sachs:

CONSUMER

(-)CHUY:  Q2 EPS $0.21 vs ST $0.22 on REV $63.3M vs ST $64M...SSS +2.4% vs ST +2.3%...Restaurant margins of 18.4% vs ST 19.1%...Guide: FY EPS $0.76-0.78 vs ST $0.80 and prior $0.81-0.84 and FY SSS + 2.3-2.6% vs prior + 2.0-2.5%...13% sht int/1.9M shares  (28%)YTD  11% impld move

(+)RL: 1Q EPS $1.80 vs cons $1.76 on better net revs +3% led by strong retail segment growth...wholesale revs a bit light but not by much, retail licensing in line, GM beat by 70bps, reiterates FY...RL is a long term story, this is not an impactful quarter for them...more skewed towards back half of the year given revenues up only 3% this quarter, they are guiding 4-6% next quarter, and 5-8% for FY...FY ends in march so clear that they are expecting a strong back to school/holiday season

(-) MDLZ: $0.40 vs est $0.39...top-line miss, GM's in line at 23.4%, penny beat from tax rate...relatively disappointing, but they maintained FY FY14 EPS $1.73-1.78 though guides organic sales growth a bit lower 2%02.5% vs ~3% prior...stock will be under pressure here...some of this pre-traded into the print as people felt things were going to be soft (-1.34% yesterday)

(=)PZZA: Q2 EPS $0.40 vs ST $0.42 on REV $380M vs ST $381M..SSS +6.0% vs ST +5.4%...Reaffirms FY EPS $1.64-1.72 vs ST $1.7 and Guides FY REV + 8-10% vs prior + 5-7%. CC @ 10:00  45 sht int/1.1M shares. (5%)YTD...9% impld move

(+)TAP: 2Q EPS $1.57 vs. estimates $1.47 on positive pricing and mix resulting in higher net sales...top line in-line, Miller Coors modest positive, International was better, worldwide volume -0.9%...likely will trade up

ENERGY

(+) ANR: Q2 EBITDA beat $49.9M vs $22.1M cons. Beat driven by on Eastern realized prices and volumes. Main focus points were lower than expected Eastern coal cash cost guidance for FY14 to $65 @ mdpt ($63-$67) vs prior exptn of $66.50 given in Q1 and GS at $66.00. ANR announced plans to shutdown its Emerald longwall mine by 2H15 which is likely to draw attention as it generates $100M EBITDA and was not explicitly mentioned in last week's mine idling press release. Think a beat for the qtr is enough for the stock to outperform as should get credit for an operational beat despite continued poor coal mkt fundamentals. CC @ 10AM

(+)CHK: Q2 EPS ($0.36 vs $0.44 cons) light but production beat and capex was lower.  FY14 production guidance also raised to 685-705 mboe/d (vs 682 cons) citing 1H production trends & increase in well connections in 2H (with capex unchanged).  Exit rate expected to be over 730 mboe/d.  Call at 9am.

(=/-)EOG: Q2 EPS ($1.45 vs $1.37 cons) beats on better production.  However, Q3 oil guidance light (298-298 MBBL/d vs 297 cons) and FY14 oil guidance still below street. Guidance a bit disappointing though could easily argue its conservative.  Given higher expectations and longer positioning, likely see some weakness vs peers today.  Call at 9am.

(-)OAS: Q2 EPS ($0.70 vs $0.74 cons) light on lower production.  Q3 guidance 47-49 mboepd (vs 50.2 cons) also below expectations.  Call at 10am. 

(+)XEC: Q2 EPS ($1.71 vs $1.71 cons) inline.  Production better, realized prices mixed.  Q3 oil production guidance ahead of expectations & FY14 raised to 860-875 Mmcfe/d (vs 844 cons & 822-847 prior).  Call at 1pm.

HEALTHCARE

(-)IRWD: sizable top/bottom line miss...weak revs from LINZESS $63mn vs whispers of $70mn; miss partially driven by destocking (inventory levels went down to 2-3 wks from 4-5wks). Bulls will blame destocking for the miss as short term headwind, but to us, the qtr doesn't look good enough given higher expectations

(+)JAZZ: Solid qtr; took up rev guide and reit EPS (offset by incr. expenses in R&D). Stock had been beaten up heading into the qtr on investor concerns; Focus for the conf call: updates on path for generic Xyrem

TMT

(+) AOL: Q2 beat as revs $606.8M vs $593.9M cons and OIBDA $121.5M vs $113.7M cons. Beat driven by membership group, Ad tech business was more inline. CC @ 8AM and setup cleaner than past qtrs  in our eyes w/ short interest trending lower ahead of EPS (5.3M shrs short or 6.8% of float).

(+) ATVI: Solid quarter all around¿better Q2 and Q3 rev guide, raised FY guide...Q2 Rev 658.0mm vs. cons 607mm. Q2 EPS 0.06 vs. cons 0.02. Q3 rev guidance 975mm vs. cons 893.3mm suggests very strong Destiny pre-orders. Q3 EPS 0.11 vs. cons 0.12 (likely on higher marketing spend).. FY rev guide 4.70B vs prior 4.675B now in-line with cons 4.70B but ATVI has reputation for guiding conservatively.. Management sounded upbeat on CC, particularly around Destiny (9/9) release and Hearthstone.

(-) CTSH: Q2 Rev 2.52B in-line with consensus 2.53B and Q2 EPS 0.66 better vs. cons 0.58. Q3 rev guide is light(2.56B at midpoint vs. cons 2.67B) and FY guidance was revised lower to "at least 14% y/y growth" from "at least 16.5% y/y growth" prior. After a sluggish 1Q, the bull case in the stock was for a meaningful acceleration in 2H. Capital allocation was a focus and perhaps the one bright spot was an additional $500mm in buyback authorization (to 2.0B from 1.5B) but we don't think that will be enough today and expect stock to be under pressure

(+) FEYE: Solid beat and raise.2Q14 revenue of $94.5mn, +3%/+5% vs. GS/consensus and exceeding the high end of guidance. Similarly, billings of $113.8mn were slightly ahead of GS estimate and +2% vs. consensus (ahead of targets as well). Revenue upside and slower expense growth drove better non-GAAP operating income/EPS.

(-) GRPN: Q2 itself wasn't a disaster but Q3 guidance light across all metrics and FY EBITDA guidance lowered. Expectations were very low for the quarter, but this is still a turnaround story at the end of the day and these results show that the business isn't really turning around.

(+) ITRI: solid Q2, as revs/EPS $489.4M/$0.54 vs $468M/$0.36 cons. Backlog (12mo.) rose to $675M vs $614M in Q1 and total backlog exceeded $1.3B for the second consecutive qtr. ITRI also increased both FY14 revs/EPS guidance and reiterated GM target of 31-32% (31.8% cons). Stock upgraded away to neutral from sell on valuation. Published short interest 6.7% of float and 10.4 days to cover.

(=) RLD: Q2 miss on lower revs $55.4M vs $61.2M cons, EPS $0.10 inline. EBITDA $22.9M beat $22.2M cons and company noted continued execution of their cost reduction plan implemented last year. Some put and takes here but stock likely holds its 200DMA and published short interest is at its 12mo. low (3.4M shrs or 8% of float).

(-) TTWO: Q2 looks good, but out-quarter guidance is light and game delay may suggests execution issues...Q2 Rev 151.6mm vs. cons 134.8mm and EPS (0.14) vs. cons (0.26). Outqtr guidance significantly below the street 95-110mm vs. cons 266.1mm and EPS (.60) ¿ (.70) vs. cons (0.01) as a result of delay of hit game "Evolve." While FY guidance was reaffirmed, game delay may suggest execution issues. Stock should trade under pressure.

(+)TWX: Q2 EPS $0.98 vs ST $0.84 and REV $6.79B vs ST $6.88B¿Turner $2.75B vs ST $2.76B...subscription +8% vs ST +7.6%...HBO $1.42B vs ST $1.38B...subscription +10% vs ST +8.2%....Warner Bro. $2.87B vs ST $2.93B. Reaffirmed FY EPS guidance & Anncd $5B buyback. CC @ 10:30...1.7% sht int/14M; shares  +27.5%YTD

(-) XXIA: Q1 revs $114M above prior $109-$113M range and street $111M, EPS $0.06 vs $0.02 cons. Announced cost reduction program including cutting workforce by 5-6%. Focus here is on the negative Q2 outlook as XXIA guided Q2 revs to $109-113M, down seq., and below street $117M reflecting continued reduced bookings from largest service providers customers for visibility products and mobility infrastructure solutions, challenging market conditions in the routing and switching test markets and lower than expected orders from large network equipment manufacturers. Negative read to JDSU (reports 8/12) though there is only 10% overlap w/ JDSU's CommTest business.

(+) ZEN: Solid beat and raise...2Q revenues of $29.5 mn (+80%) and non-GAAP EPS of ($0.16), compared to GS and Street estimates of $25.9 mn and ($0.18). Gross margins beat GS forecast by 193 bps and operating income beat by $2 mn. Expectations were high but these were solid results for first qtr out of the gate.

• Bought BofA and covered QQQ short.

I am long Bank of America (BAC) now.

And I covered my PowerShares QQQ (QQQ) short on the morning weakness.

I am back to market-neutral.

• Does social media create psychosis?

It all makes sense now: regarding Twitter (TWTR) haters!

• Look for the shares to rally today.

Break in: Bank of America's (BAC) capital allocation plan has been agreed to.

Look for the shares to rally today, even in a down market.

I am adding to Citigroup (C) at $47.80 in premarket trading on this news.

• Here is his dispatch from Wonderland.

And now from Mark J. Grant:

"Take some more tea," the March Hare said to Alice, very earnestly.

"I've had nothing yet," Alice replied in an offended tone, "so I can't take more."

"You mean you can't take less," said the Hatter: "it's very easy to take more than nothing."

"Nobody asked your opinion," said Alice."

-Alice in Wonderland

Some things in life amaze me. I am glad this is true otherwise it would be a dull existence. Every day I read article after article proclaiming that yields are going higher as engineered by the Fed. The first thing that startles me is that the Fed is included in this discussion because it belongs there. I certainly agree with the notion that the Fed is part of the equation these days concerning interest rates. Then if what I write a piece and disagree with the notion and think yields are going lower and the Fed is included in my discussion it is as if I am stoking the flames of market manipulation. The consensus psychology of the marketplace is an odd construction these days.

As I pondered all of this in the early morning hours it dawned on me that what was happening was similar to the situation with Sushi. The Japanese spends thousands of dollars for just one prized tuna.  I see gaggles of women who will only eat Sushi for lunch as it maintains their girlish figures. There is always an article somewhere extolling on and on about the healthy aspects of eating Sushi and pointing to the delicacy as part of a healthy lifestyle. Then it dawns on you.

In most of the world Sushi is known as "Bait."

I am also continuously startled by the arguments for higher yields that do not include the yields of corresponding bonds of other nations. The same lead banks encourage everyone to buy Emerging Markets stocks and bonds as a better option than American securities but when it comes to assessing our own sovereign debt well, any comparison to other countries is another matter left out of the discussion. So here again, bring out the tuna and seaweed roll and its "Bait" for lunch once again.

This is not 1776 where letters were sent by ships to London and Paris. This is 2014 and the Internet of Everything which is certainly true for the financial markets. The markets are Amazon on steroids as you can see it NOW, order it NOW, buy it NOW and get it delivered NOW.

No waiting.

It is also a world where everything can and should be compared with everything else. Now since the American Treasury market is the biggest, widest and deepest market on the planet that is certainly one consideration. The liquidity in the German or French sovereign debt market just does not hold a candle to the American market. Then when you compare their economies to the American economy and factor in the yield differential you realize that it is the machinations of the ECB and not economic considerations that are driving the yield levels.

Now, in America, we focus on the ten year bond mostly because it sets mortgage rates. However the bulge bracket for lending is in the five year space and so let us consider America's yield there as compared to the other large markets around the globe.

Just stare at the chart for a moment. Take a hard look at it and then explain to me again why American yields are going higher. You are obviously drinking the Saki while eating your "Bait."

"In the land of Gibberish, the man who makes sense, the man who speaks clearly, clearly speaks nonsense."

-Jarod Kintz

I often feel that the financial markets are located in this land of Gibberish. I speak clearly enough but nonsense prevails. It prevails until it doesn't any longer and then the March Hares and the Mad Hatters rush about with new theories for the rules of croquet. It was always, "Hit the ball through the wicket," but the caterpillar brains never knew what a wicket was anyway. It is always, "Just hit the ball."

If you don't think I am right about interest rates try this.

Go to a diner that "serves breakfast at any time." Ask for French Toast during the Revolution. Then see what happens.

• More on the June U.S. trade deficit.

The June U.S. trade deficit came in at $41.5 billion, down from $44.7 billion in May and was almost $3.5 billion below expecations.

This was the narrowest deficit in seven months, fueled by a 1.2% drop in imports (oil).

The monthly deficit report will add about 0.2% to second-quarter 2014 GDP when it is revised.

• The June trade deficit is about $3 billion smaller than expectations.

• The performance of the DJIA, the Nikkei and now Europe are all negative year-to-date.

• Where it began.

The rundown:

• U.S. futures are falling further after yesterday's breakdown. (S&P futures are down by 5 handles, and Nasdaq futures are 17 handles lower.)
• European stocks are very weak, with losses of over 1.25%.
• Nikkei is down by 1.05%, with every major subsector lower. Energy, materials and telecoms feature to the downside, while healthcare is outperforming. Pac Metals, the weakest member of the Nikkei, fell by 16% after a cut in outlook. Same with Showa Shell. On the upside, Dainippon Screen, Kubota, Shimizu, Nippon Sheet Glass and Japan Steel Works all rallied.
• China is more or less unchanged. (Legendary technical analyst Tom Demark told Bloomberg that China's market is vulnerable to a 10% drop.) Limited news on the economic front. Materials and tech were very strong, while telecoms financials and energy weakened. Chalco and Inner Mongolia Baotou Steel Rare-Earth climbed on the government's plan to set up a rare earth company. While Chinese equities hung in overnight, the region's markets are approaching important technical resistance and many, such as Demark, think that the index is a bit overbought at present levels.
• Some more foreign-exchange volatility this morning. The U.S. dollar is up 0.45%, and the euro is lower by 0.29%.
• Gold is up $6 an ounce, and crude is up $0.25 a barrel. Copper prices are down by over 1%.
• The yield on the 10-year U.S. note is down by 5 basis points, to 2.437%. Sovereign debt yields are broadly higher. In my "15 Surprises for 2014," I predicted that the 10-year yield would range between 2.50% and 3.00%. (It closed 2013 at 3.03%, and the consensus was 3.50% to 4.00% at that time.) I shorted U.S. bonds, selecting ProShares Short 20+ Year Treasury (TBF) as my preferred vehicle.

Global markets are in a sea of red following some high profile M&A breakdown news on the Time Warner (TWX)/Twenty-First Century Fox (FOX) and Sprint (S)/T-Mobile US (TMUS) fronts and the abandonment of an inversion plan at Walgreen (WAG). I cautioned that this could occur -- it's the historical pattern -- in a late post yesterday afternoon.

China, once again, is a highlight, while Europe is a low light. The latter seems to be in reaction to Italy's poor economic data (GDP very weak) as well as disappointing U.K. industrial production and Germany's factory orders.

Russia/Ukraine and Israel/Hamas continue to be front-burner market concerns, too.

Preopening earnings at AOL (AOL), Cognizant Technology Solutions (CTSH), DISH Network (DISH), Health Net (HNT), Nationstar Mortgage Holdings (NSM), Parker Hannifin (PH), Time Warner, Molson Coors Brewing (TAP) and Viacom (VIA) are the focus. After the close comes Twenty-First Century Fox, Green Mountain Coffee Roasters (GMCR), CF Industries Holdings (CF), Atmel (ATML), Prudential (PRU) and Symantec (SYMC).

The market has broken down, and I shifted back into a net short position yesterday.

This recent post outlines my concerns.

It is not the time to be materially exposed to the markets, stated simply.

Trade, don't invest.

And err on the side of conservatism.

• Here is his morning commentary.

The gospel according to Peter Boockvar:

While U.S. banks eased lending standards for mortgage lending in the just released Fed survey of loan officers, the MBA said mortgage applications to buy a home fell 1.3% w/o/w to the lowest since February. Home price gains need to slow further in order to make buying a home competitive with renting as income growth still remains sluggish (however hopefully about to accelerate as measured by the Q2 ECI report). Refi applications though rose 3.8% w/o/w after falling 4% in the week prior. The US trade deficit for June is out at 8:30am.

The rough market end to last week resulted in a drop in Bulls according to II to 50.5 from 55.6 but almost all of the bulls went into the Correction camp as Bears were up less than 1 pt to a still anemic 17.1. The spread between bulls and bears above 30 is still a "worry" according to II but now well below the "dangerous" level above 40.

Italy's economy is back in a recession after it reported a .2% drop q/o/q in its GDP for Q2. It's the 11th quarter in the last 12 that has seen a contraction and although Italian yields have fallen precipitously over the last few years, the inability of Italy's economy to generate nominal GDP above its funding costs results in a continued rise in its debt ratio. Italy now has a 1.55T euro economy supporting 2T euro's of sovereign debt. In response to the poor data, the Italian MIB is down more than 3% to the lowest level since February, its 10 yr yield is up by 3 bps to 2.78%, a 3 week high and 5 yr CDS is wider by 7 bps to the highest in two months. The lone positive for Italy today was industrial production in June which rose .9% m/o/m, one tenth more than expected but only comes after a 1.2% drop in May.

Concerns with Russian war games and the impact of sanctions on their economy had its clear impact on German factory orders in June which fell 3.2% m/o/m, well worse than expectations of a gain of .9% and is now down 3 of the last 4 months. Total trade between the two countries in 2013 was 76.5b euros, 36.1 of which was German exports to Russia, thus making Russia Germany's 11th largest export market. This export figure compares with the 100b euros of goods and services that head to France and 88b euros that go to the US.

Following the Russian troop buildup on the Ukrainian border that the Polish foreign minister commented on yesterday that roiled markets, a NATO spokeswoman today said "the latest Russian military buildup further escalates the situation and undermines efforts aimed at finding a diplomatic solution to the crisis. This is a dangerous situation." I guess she is stating the obvious.

Lastly, I've mentioned before the subtle but obvious currency war that is going on with many central banks looking to weaken their FX exchange relative to its partners via verbal jawboning or thru actual policy moves. The Reserve Bank of India's Governor Raghuram Rajan discussed this exact issue in an interview and I take these quotes from DJ: "Rajan warned that the global economy bears an increasing resemblance to its condition in the 1930's, with advanced economies trying to pull out of the Great Recession at each other's expense. The difference: competitive monetary policy easing has now taken the place of competitive currency devaluations as the favored tool for playing a zero sum game that is bound to end in disaster. Now, as then, "demand shifting" has taken the place of "demand creation."