In an interview published in the French financial daily Les Echos newspaper, IMF Managing Director Christine Lagarde says the IMF is likely to revise its world GDP growth forecasts downward in October.

The present 3.3 percent growth forecast for 2015 and 3.8 percent for 2016 are no longer “realistic.” Nevertheless, she adds growth will remain above the 3 percent threshold.

Lagarde says the ongoing global recovery is decelerating because the developing economies, which not so long ago were the main drivers for global growth, are decelerating. 

Developed economies’ growth momentum continues, but is not strong enough to offset the slowdown we see in the emerging economies.

In this context, the Chinese National Bureau for Statistics informed profits earned by Chinese industrial companies declined by 8.8 percent in August on a year-on-year basis, which was the sharpest fall in four years. For the first eight months of 2015, industrial profits of enterprises decreased by 2.9 percent.

From a long-term investors’ standpoint, it remains important to keep an eye on what goes on in China. I think that the next global recession, if it occurs, will originate in China.

Another troubling factor is the “over-indebtedness” situation where we see that “U.S. dollar-denominated” debt servicing for many emerging economies is becoming simply unbearable.

Meanwhile, Chinese President Xi Jinping said Friday during a news conference with President Barack Obama: “There is no basis for the renminbi/Yuan (CNY) to have a devaluation in the long run ... At present, the exchange rate between renminbi (CNY) and the dollar is moving toward stability ... Going forward, China will ... maintain the normal fluctuation and maintain the basic stability of the renminbi at an adaptive and equilibrium level.”

I still have my doubts that Chinese authorities will be able to defend the yuan's currency peg to the dollar. 

Interestingly, the Financial Times writes that the IMF is creeping closer to including China’s CNY in an elite basket of reserve currencies called Special Drawing Rights (SDR) (which is composed of  41.9 percent of  U.S. dollars, 37.4 percent of euros, 11.3 percent of UK pounds sterling and 9.4 percent of Japanese yen) unless the IMF staff makes a surprise recommendation against the CNY inclusion.

However, the FT also notes that remaining technical hurdles, concerns over Beijing’s heavy-handed intervention in markets, and poor communication of reforms such as the “surprising” devaluation on August 11 that set off turmoil in global financial markets, are causing nervousness within the IMF, which already has postponed its final review for inclusion of the CNY in the SDR basket until September of next year.

Long-term investors shouldn't overlook the fact we’ve seen an important turnaround since June 2014 when an emerging trend of money moving back into the U.S. dollar swayed the price of oil and started to erode emerging economies’ FX reserves.

During the same period, we also witnessed volatility in FX markets coming back to levels to levels we hadn’t seen since 1998 (the Thai baht crisis and Russian debt crisis).

This time around, it has been the crises in the Russian ruble (RUB) and the Brazilian real (BRL) that during the last 12 months have had negative impacts on mainly FX markets.

Problems in China, weakness in major emerging economies, lingering troubles in Europe and continued uncertainty about Fed rate strategy could combine to form (and I cringe at this term) "the Perfect Storm."

Watch out you, as an investor, don’t start searching for shelter when it’s already too late!