Will China Cause a Global Crash Landing?

In my last post (see Is a Fed taper bullish or bearish for stocks?), I outlined a cautiously optimistic growth outlook for the American economy. In another post (see More reasons to buy Europe), I outlined a bullish scenario for Europe. While these two major regions in the world appear to be recovering nicely, the elephant in the room that no one wants to talk about is China.

There is no question that China's rate of growth has been slowing for the past few years. Mr. Market has been showing his concern as well. My framework for analysis is the relative return of the country market ETFs of China and its major trading partners against the MSCI All-Country World Index ETF (ACWI). That way, all returns are denominated in USD and therefore any exchange rate effects are neutralized.

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