{"id":11578,"date":"2015-08-29T07:12:03","date_gmt":"2015-08-29T12:12:03","guid":{"rendered":"http:\/\/olduvai.ca\/?p=11578"},"modified":"2015-08-29T07:12:03","modified_gmt":"2015-08-29T12:12:03","slug":"heres-why-the-markets-have-suddenly-become-so-turbulent","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=11578","title":{"rendered":"Here’s Why The Markets Have Suddenly Become So Turbulent"},"content":{"rendered":"

Here’s Why The Markets Have Suddenly Become So Turbulent<\/a><\/h3>\n
\n
\n
\n
A perfect storm of failing trends<\/div>\n<\/div>\n<\/div>\n<\/div>\n

When stock markets are free-falling 10+% in a matter of days, it\u2019s natural to seek some answers to the question \u201cwhy now?\u201d<\/p>\n

Some are saying it was all the result of high-frequency trading (HFT), while others point to China\u2019s modest devaluation of its currency the renminbi (a.k.a. yuan) as the trigger.<\/p>\n

Trying to finger the proximate cause of the mini-crash is an interesting parlor game, but does it really help us identify the trends that will shape markets going forward?<\/p>\n

We might do better to look for trends that will eventually drag markets up or down, regardless of HFT, currency revaluations, etc.<\/p>\n

Five Interconnected Trends<\/strong><\/h2>\n

At the risk of stating the obvious, let\u2019s list the major trends that are already visible.<\/p>\n

The China Story is Over<\/h2>\n

And I don\u2019t mean the\u00a0high growth forever<\/em>\u00a0fantasy tale, I mean the entire China narrative is over:<\/p>\n

    \n
  1. That export-dependent China can seamlessly transition to a self-supporting consumer economy.<\/li>\n
  2. That China can become a\u00a0value story<\/em>\u00a0now that the\u00a0growth story\u00a0<\/em>is done.<\/li>\n
  3. That central planning will ably guide the Chinese economy through every rough patch.<\/li>\n
  4. That corruption is being excised from the system.<\/li>\n
  5. That the asset bubbles inflated by a quadrupling of debt from $7 trillion in 2007 to $28 trillion can all be deflated without harming the wealth effect or future debt expansion.<\/li>\n
  6. That development-dependent local governments will effortlessly find new funding sources when land development slows.<\/li>\n
  7. That workers displaced by declining exports and automation will quickly find high-paying employment elsewhere in the economy.<\/li>\n<\/ol>\n

    I could go on, but you get the point: the entire Story is over.\u00a0 (I explained why in a previous essay,\u00a0Is China\u2019s \u201cBlack Box\u201d Economy About to Come Apart?<\/a>\u00a0)<\/p>\n

    \n

    …click on the above link to read the rest of the article…<\/p>\n<\/div>\n

     <\/p>\n

     <\/p>\n","protected":false},"excerpt":{"rendered":"

    Here’s Why The Markets Have Suddenly Become So Turbulent A perfect storm of failing trends When stock markets are free-falling 10+% in a matter of days, it\u2019s natural to seek some answers to the question \u201cwhy now?\u201d Some are saying it was all the result of high-frequency trading (HFT), while others point to China\u2019s modest […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[109,127,130,400,2218,1138,753,2773],"class_list":["post-11578","post","type-post","status-publish","format-standard","hentry","category-economics","tag-capital","tag-charles-hugh-smith","tag-china","tag-hft","tag-peak-prosperity","tag-stock-market","tag-stocks","tag-volatility"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/11578","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=11578"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/11578\/revisions"}],"predecessor-version":[{"id":11579,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/11578\/revisions\/11579"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=11578"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=11578"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=11578"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}