As people continue to digest breaking news out of Greece and around the world, the Godfather of newsletter writers, 90-year-old Richard Russell, warned that China may be a black swan that will shatter confidence around the world.
Richard Russell: “The prevailing worry is about whether Greece will or will not exit the euro. From the stock market’s standpoint this is a nonevent. The only ramification would be if Greece left the Eurozone and this set off a parade of followers such as Portugal, Spain and even Italy.
Personally, I am much more worried about the building bear market in China and the planet’s second largest economy sinking into a recession … there is no telling the ramifications. One immediate result would be less movement of goods, and this may be showing in the Transports.
China – The Black Swan That May Shatter Confidence Around The World
Again, I repeat that China is what worries me. The “polite” part of China’s bear market has already occurred. What I am really afraid of is a crash as the Chinese bear market turns nasty.
China is preparing a huge infusion of liquidity in an effort to halt the decline. Bear markets are fed by fear and once the fear becomes wide spread, a bear market can become a soul searing affair. Bear markets are deflationary and this one could spell the end of fiat money.
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