Odey Asset Management's big worry this year is undoubtedly China: capital stock is falling as capex continues to increase, therefore current investment is...

Odey Asset Management's big worry this year is undoubtedly China: capital stock is falling as capex continues to increase, therefore current investment is value destroying. China is heading for a Minksy Moment: neither capital nor interest can be paid. Meanwhile, collateralising Chinese corporate lending with commodities is distorting commodity prices. Looking at Europe, it faces the dual risk of deflation and disruption. QE saved the banks by suppressing yield, but the banks now can't make any money. Even an extension of QE by the ECB may not help - what bonds would the ECB buy? Odey remains positioned for a US recovery however. The data are recovering after the winter lull. In fact the ST unemployment rate has now completely normalised. We see improved lending to Commercials and Industrials, and signs of increased capex. For the full-length Odey Quarterly call and accompanying presentation, please click here: (VIEW LINK)