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Societe Generale Albert Edwards recently had some very grim things to say to an audience in Toronto, reports The Globe and Mail‘s Brian Milner.The uber-bear strategist argued that all signs pointed to a “very hard landing” for China’s already slowing economy. This will surprise investors and cause commodities and stocks to collapse.
Edwards’ bearish calls are not new.
What was new was his somewhat optimistic call for the euro in the event of a Chinese hard landing. Indeed, it was barbed optimism.
From The Globe and Mail‘s:
Ironically, a Chinese slump – and we’re still talking about annual growth of 5 or 6 per cent – could help the embattled euro zone. “Maybe the best thing for the euro would be if China hard landed and Germany [whose export boom has been powered by Chinese demand] went into a deep recession,” Mr. Edwards muses. “Then they might be far more accommodative or far more reasonable about forgoing austerity.“
However, this isn’t exactly Edwards’ baseline scenario. According to Milner, Albert’s China hard landing scenario will ultimately cause the eurozone to fall apart and the U.S. to slip back into recession.