Last week the People’s Bank of China (“PBOC”) took the unexpected action of devaluing their currency, the Yuan (Renminbi), for three consecutive days.
It never ceases to amaze me how the unexpected can work people into a frenzy. The only people that see this type of thing coming is the ammo-and-canned-food crowd who, for years, constantly call for a particular event to occur. Then when it does these same folks are the first to say, “I told you so.”
If you’re a regular reader of news or financial sites, the headlines alone would make you think you should be worried even if you’re necessarily inclined to get caught up in the media hype. Some of the headlines from last week:
“Will China Shock Bring Fed Delay?”
“China Can’t Risk Devaluation Chaos Shock”
“China’s Scary Lurch Back to Socialism after the VIX Super Spike, is the Worst Ahead”
“The Yuan is the Chinese Monetary Panic Button”
“Did China’s Devaluation Crush Yellen’s Rate Hike Strategy?”
With words like “shock,” ”chaos,” ”crush,” and “panic” what are investors supposed to think? Headlines like this are meant to encourage clicks so that you’ll read the articles. They are not, generally speaking, indicative of reality.