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For investors looking to get the most upside out of a strong dollar trade, Credit Suisse suggests that emerging market currencies are likely to see some of the most dramatic shifts against the greenback in the coming months. Rising rates—or even the threat of them—tend to make life difficult for emerging market economies, particularly those with high current account deficits. Those countries depend on capital inflows to fund their operations, and when rates are low in the United States, as they have been for the past six years, investors are usually happy to oblige. But when rates are rising, investors start shifting their money back to the relative safety of the United States. The South African rand, Brazilian real, Mexican peso, and Turkish lira look particularly vulnerable to capital outflows this time around, the strategists say...Falling prices are a touchier subject for Europe, where the economic recovery is still nascent and fears of sustained deflation prompted the European Central Bank to introduce a bond-buying program earlier this year. If a believable specter of deflation reappears, the central bank would almost certainly extend its commitment to quantitative easing, while economies outside the Eurozone, such as Sweden, would also likely opt for easy policy. The ECB might even add to its stimulus, depending how much further the yuan weakens. At a time when the Federal Reserve and Bank of England are ready to tighten, relatively loose policy would make European stocks attractive. So did you follow that? This is how the butterfly effect of the global economy works these days: China devalues, European stocks look more attractive. They’ve even got a few arguments in their favor that have nothing to do with monetary policy. Fifty-eight percent of European companies that have announced second-quarter earnings have beaten expectations, and investors have also poured $1.3 billion into exchange-traded funds that track the EuroStoxx 600 index over the past month. Small-cap European stocks, which are less exposed to China than large-caps, merit particular attention.