The major averages enter the final hour mixed, managing to shrug off their early losses on little real news.
One of the classic ways to defeat trade tariffs in an attempt to win a trade war is of course currency devaluation. China’s response to 15% trade tariffs so far this year has been to apply tariffs of their own and devalue its currency the Yuan in relation to the Dollar. Year to date it has fallen some 6.7% as it moves towards a 10-year low, so the Chinese are well on their way.
Growing emerging market crises spurred on by the strong Dollar, rising interest rates and record high debt levels are a toxic combination that so far hasn’t produced and significant consequences outside of a few emerging market economies like China, Turkey and Indonesia to name a few. That said the IMF or International Monetary Fund and other global financial bodies are increasingly issuing warnings with respect to economic growth, currency and debt crises as this combination steadily ratchets up the pressure particularly on those that are heavily indebted, just like last time. The trend is your friend until it isn’t, for the heavily indebted, by the time the tide turns, it’s usually well past too late.
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