Capital flees China, yuan in trouble

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Albert Edwards of Society Generale with the note. Capital outflow from China is accelerating dramatically. If the tumbling JPY pushes more active devaluation then all bets are off. Amid Fed tightening and EM capital outflow pressuring capital accounts, a falling CNY adds pressure to EM trade accounts as well, and commodity prices, and the EM complex collapses as an investment option.

This is how the Fed tightening cycle ended in 2016 and it will do so again as CNY falls and takes broader markets down with it.

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.