Global Economy: No Room for Any Volatility

There's no room for error, no room for volatility for a global economy on the knife's edge of crisis. While some degree of rescue may be coming, the equilibrium held since 2009 is on the verge of breaking. There's a lot of focus on the UK now as being in trouble, but as the first to exit from the EU and without the euro as its currency, with the pound at 30-year lows, the UK is actually ahead of the game.

WSJ: ‘Brexit’ Upends China’s Plans for Turmoil-Free Summer
A few days before Britons voted to leave the European Union, Chinese Premier Li Keqiang visited the central bank’s monetary-policy department to make a simple point: The yuan must be kept stable.

...China is on the receiving end of global market turbulence triggered by the “Brexit” shock. And no part of its financial system is more vulnerable than the yuan, already the subject of a precarious central-bank high-wire act.

With all major currencies except the dollar and yen plunging in the wake of the British vote, pressure grows on the People’s Bank of China to also let the yuan weaken. But if the gap with the dollar becomes too big, capital outflows could speed up again.
The gap will widen. Prepare accordingly.

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