From Joachim Fels, global economic advisor at PIMCO:
….The downside risks to the global economy today are really concentrated in emerging markets. After August, investors have been watching developments in China with particular caution. I should first note that our baseline view for China sees below-consensus growth, along with policy leadership with the will and the wallet to manage the slowdown. Indeed, policy actions in the past month or so have mollified markets to some degree. But there are a lot of uncertainties. China’s policymakers have the tools, but they must manage a tricky transition, and as global investors we are left wondering if we have enough transparency into the details. The tail risk remains of a really hard landing in China, perhaps a very sharp devaluation. It’s not our baseline view, but an important risk to monitor.