Red Ponzi Update---Panic Point Is Near

Stocks, Commods and EM on overnight lows with the Yuan decline accelerating (CNH to the lowest level in a year) as signs of accelerated easing / outright stimulus confirm the Chinese economic slowdown and credit crunch reality..... The cumulative move in offshore deliverable CNY (USDCNH) over the past 30 sessions is 6.6%, a 5 standard-deviation event across all returns over the past 10 years and now significantly larger than the devaluation of August ’15.

The implications of this Chinese “confirmed slowdown”—alongside the ambiguous / “edge-less” “trade war” noise—have driven the recent escalation of “global growth scare” which I have been discussing in my “Downshift” thesis since mid-June. As experienced in the period following August ’15, the Yuan devaluation has the potential to trigger a global “disinflationary impulse” with stronger US Dollar NEGATIVELY impacting Commodities, and with it, global Fixed-Income, Equities and EM assets.

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