The Closet of Shoes is About to Drop

This article ("Currency Crisis is Gathering Storm" -- click on this link and scroll down) perfectly summarizes why we'll continue to wait for major emerging markets to experience financial collapses before we'll consider raising our equity allocation back to our "policy allocation." We probably won't be waiting long.

Kudos to the blogger Yves Smith for also pointing out a few ways that catastrophe can be postponed -- China could prop up collapsing currencies, and international agreements could help too. Postponing disaster increases the chances of a softer landing, but we expect more downside to risk assets in the near term, and tough battles beyond that.