Editor's Note: Below is a brief excerpt and chart from today's Early Look written by Hedgeye Senior Macro analyst Darius Dale. Click here to learn more about the Early Look.
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While we’ve been proven consistently accurate for refraining from joining the Macro Tourist community which believes China has to fall off a cliff economically, a continued deceleration in the growth rate of demand emanating from the #OldChina economy has historically been a direct headwind to reflation in its various forms – particularly for broad swaths of the commodity complex and emerging market risk assets. What might be lost on investors, however, is how that assumed price action risks perpetuating a negative feedback loop with respect to global growth expectations. Any negative revisions to the global growth outlook are likely to be met with a series of higher-lows in the U.S. dollar as consensus carry trades are unwound at the margins. And as Keith and I have been saying on the road to clients and prospective clients for the past month or so, “the [U.S.] dollar is the new VIX”. |
