Turkey remains in a dire devaluation trend. Wake me up if 6 breaks, until then today is a breather and an opportunity to hedge more risk, writes Bob Savage Tuesday.

If yesterday was about contagion, today is about relief. The fact that the Turkish lira (TRY) isn’t at a new low has brought out buyers of the dip. The flip-flop of mood has been attributed to this calming of Turkey contagion fears.

The reality is that nothing has changed and that Erdogan now wants to ban Apple (AAPL) iPhones as his next retaliation against the U.S.

The headline stories of EM calm obscure the facts about China slowing. The watching-Turkey-not-China story will unwind today as the data from China is clearly troubling – jobs which are the most important to keeping social stability are less plentiful. Investment spending is at a new low – and particularly where people need it the most – healthcare and education.

There is nothing good about the China story except that the trade tariff talk has slowed. Perhaps that is enough for the flippers to keep buying the dip.

As for Europe – there was a significant economic data dump with German GDP mixed, EU GDP better and UK jobs strong but wages flat. The job-to-inflation connection has stalled in the developed markets and it’s allowed central bankers room.

The question remains whether the FOMC is still the central bank of the world and its path to normalization off-putting enough to drive away more risk in September.

Data for Europe today puts ECB back in ending QE mode and that helps and hurts – with Italy still mired in political budget battles and EU fights. The simple angle for trading today is that after Friday and Monday selling, today is a resting day, but the more complicated view may be about taking advantage of a market focused on the wrong hand of EM risks.

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