China is bailing out the world economy, growing at 8% a year while the rest of the globe struggles.
Unfortunately, if China bears are right, those days will soon be over.
Jeremy Grantham of GMO is nervous about emerging markets, especially China.
Our other perennial favourite – emerging market equities
– has had an amazing recovery, all things considered, and is no doubt also vulnerable to a reassessment of how quickly the global economy is recovering. Deciphering the strength of the Chinese economy will also play a major role in formulating our view of any future relative strength of emerging. My colleague, Edward Chancellor, strongly suspects that the Chinese economy is dangerously
unbalanced and very likely to come unhinged in the next
few quarters, surprising the pants off investors.
Meanwhile, Jeremy’s prediction earlier this year that S&P would soar to 1000-1100 and then collapse for 7 years seems right on track.
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