Having spectacularly rung the bell at the bottom a few weeks ago, Ray Dalio is back with more bad advice on China.
Last week, China’s leadership—including President Xi Jinping, the Politburo, the CSRC, and the PBoC—clearly 1) announced a reflationary barrage of fiscal and monetary policies and 2) made statements in support of free markets as a big step to end the deflationary deleveraging and to stimulate creative productivity. That happened at the same time as 3) Chinese assets were (and still are) very cheap, so it was a combustible combination of influences that set the markets on fire. It was a big week. In fact, I think that it was such a big week that it could go down in the market-economic history books as comparable to the week Mario Draghi said that he and the ECB would “do whatever it takes,” if China’s policymakers, in fact, do what it takes, which will require a lot more than what was announced.
What a Beautiful Deleveraging Looks Like
