The Chinese government is attempting to centrally plan its currency and inject enough stimulus to steady its slowing economy. And yet, the Shanghai Composite continues to plummet. China's stock market is officially in crash mode, down 24% since its January high.
The billion dollar question investors should be asking themselves right now is: Can the Chinese inject enough stimulus to right the ship? It's a tall order. Hedgeye CEO Keith McCullough puts it simply: "They're gonna need a bigger boat."
In the clip below, McCullough pulls back the curtain on how central planners try to control markets and the unintended consequences it often has when central planning fails. "When it stops working, like it has in China, it gets really dangerous," McCullough explains.
Mr. Keith R. McCullough is the Founder and CEO of Hedgeye Risk Management LLC. He covers the strategy sector at the firm. Prior to founding the firm, Mr. McCullough was a Partner, Portfolio Manager, and Managing Director at the Carlyle-Bluewave Partners hedge fund. Prior to that, he was a Portfolio Manager at Magnetar Capital; a Founder, Managing Partner and Co-Portfolio Manager at Falconhenge Partners, LLC; and Partner, Executive Vice President and Portfolio Manager at Dawson Herman Capital Management. Mr. McCullough got his start as an Institutional Equity Sales Analyst at Credit Suisse First Boston. He is currently co-chair of the NYC Bipartisan Policy Center; he writes regularly for Fortune and Forbes and is the author of the popular book, Diary of a Hedge Fund Manager.