Germany's DAX is now down 15% since the "China doesn't matter" devaluation began with most European borses down 3-5% from Friday's close as the day started off with a modest bounce only to test new lows. EURUSD is now up 500 pips in 4 days back to 7 month highs. European bond risk is surging with Portugal up 50bps since China's debacle began. And finally crude continues to get battered, now testing the $38 handle for the first time since Feb 09.
As the massive EURCNH carry trade contonues to be unwound, EUR surges higher to 7 month highs...not what Draghi ordered...
And as carry goes, so goes risk... European stocks are being battered...
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And crude has collapsed through another big figure to the $38 handle...
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And finally do not forget this is not money that will rotate from 'stocks' to 'bonds' this is credit-created positions via carry/repo that when liquidated simply disappear - there is no cash to move to another asset. That's the whole point - the asset inflation has been created by leveraged carry - and as is obvious now, the market emperor is wearing no clothese beneath the thin veneer of centrally planned smoke and mirrors.
Charts: Bloomberg
