Gavekal explains in this must read piece
A world-wide recession is looking more and more probable. And if the time lag is similar to those in the past, it could hit by March 2019. Indeed, looking at the performance of markets over the last six months, it looks as if a bear market may have already started everywhere but in the US. As they have written repeatedly in recent months, bears are sneaky animals. Their victims seldom see them coming (see America First, The Rest Of The World Second).
1.Global Banks have lent too freely in US dollars, and their shares are suffering
2.And to add insult to injury, the US dollar is appreciating
3.The eurozone is in no fit state to weather another recession
4.The big danger is a runaway rise in the US dollar ( and my views on this are very vocal…)
5. Investors should sell the shares of companies with negative cash flow, especially if they are short US dollars. 6. The big risk is an uncontrollable rise in the US dollar if Europe’s fixed exchange rate system falls apart, much as earlier US dollar liquidity crises led to the collapse of fixed exchange rate systems in Latin America and Asia.
We are in the fourth day of five day test match and you have been warned