SocGen Models A Chinese Hard-Landing; Sees The S&P Crashing 60%
by Tyler Durden
ZeroHedge.com
10/06/2015
Now that even permabulls are openly discussing a recession as a possibility for the US economy, a comparable and far more dire scenario is making the mainstream rounds: a China hard-landing.
Earlier today, SocGen decided to model out what what would happen to equities in just such a scenario. In fact, it took it one step further and combined this with what an “EM lost decade”, one which increasingly looks more realistic, would look like.
This is what it found:
Our model indicates the US equity market could potentially drop by 30% in the event of an ‘EM lost decade’ and by 60% in the event of a China hard landing (i.e. S&P 500 back to its lows).
The silver lining will depend on just how aggressive the response to such a collapse will be:
The amplitude of the correction would be a function of the policy response. In both scenarios, we think global equities would rebound strongly after
having overshot (i.e. equities to price in a more optimistic scenario).
The Rest…HERE
