A falling Chinese yuan will unleash a wave of global deflation that will send the U.S. into its next recession and pull the S&P 500 back down to 550 points, according to a strategist at Societe Generale.
Albert Edwards, the notoriously bearish analyst at the French bank, released a note on Wednesday in response to the recent currency devaluations by the People's Bank of China (PBoC). This depreciation - with reports last week that it's far from over - is a result of an asset price bubble that the U.S. central backed helped to create, according to Edwards.
"(Quantitative easing in the U.S.) may not have done much to boost U.S. growth, but it certainly inflated global asset prices into the stratosphere," he said in the note Wednesday.
"If I am right, the S&P would fall to 550 (points), a 75 percent decline from the recent 2,100 peak. That obviously will be a catastrophe for the economy via the wealth effect and all the Fed's QE hard work will turn (to) dust."