China's growth is expected to slow down; most commentaries I have seen expect Chinese GDP to be down to roughly 7.2 percent in the third quarter, from 7.5 percent in the second. It may drop even lower next year. There's very little room to keep cutting rates, since they are worried about a real estate bubble.
That being said, I am not convinced we are headed for a significant correction. We have an ongoing recovery in the U.S. economy, the Federal Reserve reminded us on Wednesday that they are likely to remain dovish, and other central banks have certainly signaled they will continue with easy money policies.
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As for earnings, it's early, but the earnings reports we have received have been excellent from Alcoa and Pepsi, with Pepsi briefly reaching an historic high.
However, overnight Microchip Technology, a manufacturer of specialty semiconductors, warned of lower revenues due to softer China sales (they get about 60 percent of revenues from Asia). The debate is whether this is company specific or not; some believe the company's broad offerings make it a good early barometer.
Susquehanna, for example, said "MCHP's pre-announcement last night leaves us with little doubt that an industry correction is upon us." Still, we haven't heard of a slowdown in chip sales to any extent prior to this.
Juniper also pre-announced lower results, citing weak service provider spending, but this is likely due to AT&T and Verizon, which often front-end load their spending into the first half of the year.
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Still, there are a number of unknown factors that are very difficult to model, the primary concern is Ebola. There has been quite a lot of healthy debate about whether the media is "hyping" the contagion scare. I'm very sensitive to these concerns—there's no doubt the media can get obsessive about certain issues—but in the case of Ebola I think there is cause for serious concern.
Jack Rivkin and others have noted that the main issue is not death by virus. It's the impact on psychology which which in turn affects activity. In extreme cases, it could result in significant declines in economic activity if a critical mass of cases occurs in dense urban areas. This could happen anywhere: including Bangkok, Mexico City, Managua, Lagos or New Delhi.