China on the Market Radar

FXI, the China ETF, has been underperforming U.S. stocks for a number of years and has moved lower recently in the wake of a domestic loan default and fears of a chain reaction.  Emerging market bonds (EMB) have also moved down in recent days, but are still well off lows of the last several months.  Note also the weakness in copper, which has been tied to the China trade in interesting ways.  With banks cutting lending to sectors with high levels of shadow banking debt, this familiar story has gained a bit of urgency in recent days.