I think the stock market is making an important bottom, here, in January. We are going to look back on this later in the year or, certainly by year's end, thinking about how great an opportunity it was. It's scary now, for sure, but that's usually the time to buy.
My reasons are many, but it mostly stems from powerful cyclical and seasonal factors that have to do with fiscal flows. We are now entering into what is normally a very strong fiscal period. We're coming into the time of the year when you have the greatest amount of stimulus flowing into the economy.
Every February the Federal government pumps nearly a half trillion dollars of spending into the economy. That's due to Federal tax refunds. They balloon normal monthly spending to major peaks. It's all going to explode, next month. Following that, we usually have a strong March and April -- at least until mid-month, then the tax man takes a lot of it back. Before that happens, however, the market can tack on quite a bit. Right now, it's making a major bottom.
That's the fiscal angle to my bullish outlook. The other angle is that bank lending is on fire, right now. Total loans and leases at commercial banks are rising at 14% annually. That's the fastest pace in seven years. If money indeed moves the markets, then there seems to be plenty to go around. It is not all equally dispersed, that's true, but I am talking aggregates; and markets and indices. I wish it would be more equitable, but I'm not the one who gets to decide. I am a trader, and as such, I am trying to figure out which way the market is going to move.
The recent selloff -- and it was brutal, don't get me wrong -- was based on nothing but irrational fear, in my opinion. People selling China don't understand what is happening there. Yes, the Chinese authorities have mucked it up royally in the short term, and continue to rely on bad policy and old habits like devaluation. On the other hand, however, the levels of spending over there are surging and it's mainly going to social spending and income supports. Long term, there's no way that's a bad thing. You have to see past the short-term policy confusion and investor panic.
There are those investors who choose to sell the U.S. markets because China is making some missteps. I understand that the yuan devaluation constitutes de-facto export of deflation, but the markets have more than compensated for small percentage devaluations in the yuan, at this point. I mean, come on, ten years ago the yuan was 8.25 to the dollar and today it's 6.25. So there's a one or two percent downward adjustment? The selling now is nothing more than panic and the final liquidation of weak longs. It will pass.
The U.S. economy is on a good footing, and we are putting in a bottom right now. There are plenty of bargains to be had, particularly in materials. I remember screaming about the absurdity of high commodity prices back in 2007 and 2008. Everyone thought I was a fool, but look how that turned out.
My mind only knows how to buy things things when they're cheap and sell them when they're dear. I guess there are other ways to make money, but they're just not aligned with the way I like to operate as an investor.
The key to all this is patience. The market accepts your time as payment. if you can wait it out you will be well rewarded.