China

Oil markets will continue to be buffeted by Russian overtures to OPEC suggesting a desire to orchestrate a production cut-back, while uncertainty over the Fed's next move keeps markets on edge.

An improvement in the euro area credit impulse is encouraging, but we explain why it is not enough to sustainably boost risk-assets.

China's capital outflows since last year can be broadly grouped into three categories: reduced foreign inflows (and accelerated outflows), domestic firms deleveraging dollar debts, and domestic entities increasing dollar assets. Barring an extreme scenario, the PBoC should have more than enough ammunition to defend the RMB, should it opt to.

The Fed will upset the rebalancing of oil markets if it misreads the current sell-off as weakness in oil demand.

Corporate profits are more sensitive to selling prices than to volumes. Falling prices even amid mildly rising volumes could produce a meaningful profit contraction. Stay with deflation trades. In particular, maintain the short EM stocks / long U.S. 30-year Treasurys position. Indian stocks are still pricey and will deflate further in absolute terms.

There are no signs of broader financial stress in the Chinese corporate sector. The most recent financial market turmoil has had no systemic damage to corporate sector balance sheets. We are leaning against being overly bearish. Current valuation readings, particularly for Chinese H shares and Hong Kong stocks, on a historical basis have never been sustainable.

Taiwan's opposition Democratic Progressive Party is poised to win the presidency and possibly the legislature in elections January 16. The result will be icier cross-strait relations in the coming years that will add a geopolitical headwind to Taiwanese assets, even as it struggles to cope with a low-growth world. Taiwan still has advantages over other emerging markets, but its outlook is darkening.