Macroeconomic fundamentals and trends indicate a real risk of a permanent slowdown in Chinese activity to 6% or below in the very near term. The process of economic development in China is very likely to initiate a reversal of the gold-rush mentality that has gripped the market for the past decade and spark a crisis of confidence which does some damage to both capital costs and real activity in China.
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In this edition, we highlight Fed policy and our economic outlook for Mexico and Brazil, the US and Canada. We are constructive on the entire region, and expect the US economy to lead the way higher. Our outlook on the US Dollar is strongly positive. Over all horizons, the dollar will benefit from better relative economic performance, less rapid yuan appreciation, and tighter rate differentials.