China has just lit a firecracker under the market

China finally unleashed its big bazooka – devaluing its currency. John C Burford looks at the effect it will have on the markets.

It was inevitable, but China finally unleashed its big bazooka on Monday night by devaluing its currency. The move has re-booted the global currency race to the bottom, prompted by China's recent horrendous economic data (exports down 7% in July, for example), as its hard landing gets under way.

The implications are clear more global deflation is coming, with prices of consumer goods from China (and elsewhere) still falling. The deflationary depression for Western nations that I have been warning about is now getting that much closer.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free
https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

John is is a British-born lapsed PhD physicist, who previously worked for Nasa on the Mars exploration team. He is a former commodity trading advisor with the US Commodities Futures Trading Commission, and worked in a boutique futures house in California in the 1980s.

 

He was a partner in one of the first futures newsletter advisory services, based in Washington DC, specialising in pork bellies and currencies. John is primarily a chart-reading trader, having cut his trading teeth in the days before PCs.

 

As well as his work in the financial world, he has launched, run and sold several 'real' businesses producing 'real' products.