Since we've been watching markets, prognosticators haven't stopped warning about the risks in China. Needless to say, none were remotely true, but the drumbeat of predictions of an imminent collapse or slowdown in the economy for various reasons became so frequent that they're routinely drowned out. Watch out for the US CPI due next. 

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It's a case of the 'the boy who cried wolf' and markets have become largely desensitized to China. Or at least global markets have.

The rout in Chinese markets has grown violent and persistent. Particularly worrisome are the $305 billion in Evergrande bonds. The securities of China's second-largest property developer are trading as if bankruptcy is imminent, potentially leaving millions of Chinese home buyers and many contractors with unpaid bills and unfinished projects. A protest from 100 disgruntled investors descended on the company Monday in Shenzhen.

Evergrande's problems coincide with crackdowns at Chinese tech and media companies as President Xi pushes to reform society. Officials have touched on a push for 'common prosperity' in a possible hint at wealth distribution or the formation of a stronger social safety net.

The shifts have come at the same time as China fights to restrain prices in commodity markets, including an announcement – without mentioning size of timing – of a release of strategic oil reserves.

All this has come at a period when Chinese economic data has consistently undershot negative growth. GDP growth has been the guiding star of Chinese policy for a generation but the shift to a consumer-led economy has been difficult and officials may try to ditch those targets to save face while reframing the goals towards common prosperity and social progress.

Along with these shifts, we worry that the recent softness in equity markets reflects risks around China. It's clear that Fed policy is less of a concern, with comments from top officials failing to move the market. Does it really matter if the taper is in November or December?

For now, there's no definitive trade on China but we will be watching very closely.

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