Last night, UK's Telegraph reported Societe Generale global strategist Albert Edwards sounded the alarm on China and warned that emerging market investors will be shaken to the “core” as “great unwind has only just begun.”

In a note to clients, Edwards said the potential for a deep recession in the US is already on the radar, but many will be shocked should China’s economy contract. That's because consensus has it that emerging markets will be resilient despite economic hardship in developed countries.

“The emerging market boom is totally tied up with a decade of ballooning current account deficits in the US. Put that into reverse and you’ll be surprised what pops out of the woodwork.”

Edwards added that the US could see monthly trade surpluses within a year. He sees an emerging market liquidity squeeze to intensify, turning assets linked to the region into “toxic waste.”

This echoes similar statements made by Morgan Stanley earlier this month. Its research team said China’s housing market could be headed for a “meltdown” with Beijing, Shanghai and other cities already showing declining home sales.

From the Bull Pen: Portfolio Recovery Associates (PRAA) was mentioned on the Buzz today. Bad times may be good times for this company. Patient bulls may be able to catch this stock around $40 support.

From the Bear Cave: If the Treasury Plan falls through, we could see stocks globally get a boost. Should that occur, bears can consider playing the downside in the China ETF (FXI) if the stock rallies back to $40.