On Monday, when the Yuan weakened below the all important multi-year support line, Beijing was quick to allay fears that this was an intentional devaluation by saying that it was determined by market forces. Meaning they were no longer in control over their currency. The only thing worse than a currency war is a currency crisis...
Recall that stocks ended the first half of this year with the biggest gains since 1997. That was the year that ignited the Asian currency crisis in the second half of the year. Meanwhile, in early August 2015, the Yuan devaluation sent shockwaves around the world, leading to domino crash within two weeks later.
Overnight we learn that global treasury bond yields are crashing further in a deflationary death spiral. Which has several consequences, not the least of which is weakening of Emerging Market currencies.
"Germany’s yield curve is now at its flattest since the financial crisis -- and yields across the world are slumping to fresh lows -- in a cacophony of signs that investors are growing increasingly pessimistic about the outlook for the world economy. Central banks from New Zealand to India have responded by surprising markets with their efforts to boost stimulus."
“This is all setting up for something very disruptive”
"Germany’s yield curve is now at its flattest since the financial crisis -- and yields across the world are slumping to fresh lows -- in a cacophony of signs that investors are growing increasingly pessimistic about the outlook for the world economy. Central banks from New Zealand to India have responded by surprising markets with their efforts to boost stimulus."
“This is all setting up for something very disruptive”
Tuesday close:
It appears that the much-desired Fed rate cut last week combined with the escalating trade war has unleashed Pandora's box of global deflationary collapse, which can only have one long-term economic impact - to further oppress the people who can least afford it, via currency devaluation.
Gamblers need to learn that not all bailouts work, especially when they've been well-conditioned to front-run them into risk assets
Outside is America
"We may have to change store hours from time to time"
