Headlines

Trump decries white supremacy, video games following shootings

Kyle Bass: China’s currency would collapse 30% to 40% if they stopped supporting it

[China] Halts new agricultural purchased ...

O’Rourke on Trump: ‘Jesus Christ, of course he’s a racist’

Trump stumbles into Kashmir showdown

China fires biggest warning shot yet in trade war and now its up to Trump to decide how far to go

Super rich selling stocks, buying properties — keeping cash ready ...

President Trump calls for Red Flag laws after Texas, Ohio shootings

Nadler: Judiciary panel could recommend articles of impeachment by late fall

Rating China’s retaliation in the trade war: ‘On a scale of 1 to 10, it’s an 11’

Mexico vows to take legal action against USA after El Paso shooting ...

Chinese state media: White nationalism is deeply rooted in Trump’s mind’

Silver Lining

Yesterday morning I watched a compelling interview on CNBC with Kyle Bass, a hedge fund manager who has shorted the Chinese yuan. His argument was that China is just months away from having to devalue it currency by not just 10% but more like 30-40% ... for his reasoning see: CNBC Interview. Then later I read an article that made a convincing case that the Chinese banking system has as much as 5 trillion dollars of nonperforming loans and the government might soon be required to bail them out using its huge sovereign reserves ... for the details see: New York Times Article.

This all sounds like awful news ... not so fast! If the yuan were to be devalued by the amount that Kyle Bass expects, then Chinese products would have enormous price advantages around the world ... and its economy would soar. Also a bailout of the Chinese banking system would clear the decks for a number of new loans to Chinese industry ... matching its explosive industrial expansion with equivalent liquidity. The result would be that China would likely once again be the world's growth engine ... quickly using up the world's existing commodity surpluses. And this would solve much of the deflationary pressures that now overhang the world's stock markets.

Therefore, once again, every cloud has a gold, copper, oil, steel and silver lining.