Summary

Stephen Jen looks for disinflation to be key them in the next 3 quarters. The dollar will depreciate with falling inflation, it is over valued and the twin deficits will soon be acknowledged. Erosion in USD Hegemony may accelerate. Stephen argued for a soft landing as the global output gap is too big for a deep recession. Sharp policy divots give hope for policy pragmatism with the new Politburo Standing Committee in Beijing consisting of more proven technocrats than the outgoing team. The long-term trends in economic might seem compelling and Asia is set to dominate the next 5 years while Europe will continue to see large capital outflows in search of high yields, to fund retirement. FFR Cuts combined with global disinflation and a China recovery delivers a positive outlook for EM.

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