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Strategies & Market Trends : Buy and Sell Signals, and Other Market Perspectives -- Ignore unavailable to you. Want to Upgrade?

To: Hawk who wrote (2331)	4/12/2010 7:07:16 AM
From: fred woodall	Read Replies (1) \| Respond to of 221950

When asked what the stock market will do, J.P. Morgan replied, "It will fluctuate". Trying to explain it more than that just doesn't work! I can give you more reasons for shorting this market than you would care to hear but that doesn't mean it will go down. I can say from my seat it looks like we are fixing to take off like a freight train. <<thereby making their budget deficit bigger>> It is far worse than anyone can imagine. That will be 2014 story.

To: Hawk who wrote (2331)	4/12/2010 7:35:34 AM
From: fred woodall	1 Recommendation Respond to of 221950

US Trade Deficit Burdens Economic Recovery -------------------------------------------------------------------------------- Mon Apr 12 07:32:06 2010 EDT These are the personal views of Peter Morici, a professor at the University of Maryland's Robert H. Smith School of Business and former chief economist at the U.S. International Trade Commission: Tuesday, the Commerce Department will report the February deficit on international trade in goods and services. Analysts expect it to increase to $39.0 billion from $37.3 billion in January. My forecast is in line with the consensus. The trade deficit, along with the credit and housing bubbles, were the principal causes of the Great Recession. Now, a rising trade deficit and continued weakness among regional banks threatens to stifle the emerging recovery and keep unemployment near 10% through 2011. At 3.1% of gross domestic product, the trade deficit subtracts more from the demand for U.S.-made goods and services than President Barack Obama's stimulus package adds. Moreover, Obama's stimulus is temporary, whereas the trade deficit is permanent and growing again. Subsidized manufactures from China and petroleum account for nearly the entire deficit, and both will rise as consumer spending and oil prices rise through 2010 Money spent on Chinese coffee makers and Middle East oil cannot be spent on U.S.-made goods and services, unless offset by exports. When imports substantially exceed exports, Americans must consume much more than the incomes they earn producing goods and services, or the demand for what they make is inadequate to clear the shelves, inventories pile up, layoffs result, and the economy goes into recession. To keep Chinese products artificially inexpensive on U.S. store shelves and discourage U.S. exports into the Middle Kingdom, China undervalues the yuan by 40%. Beijing accomplishes this by printing yuan and selling those for dollars to augment the private supply of yuan and private demand for dollars. In 2009, those purchases were about $450 billion or 10% of China's GDP, and 28% of its exports of goods and services. In 2010, the trade deficit with China is reducing U.S. GDP by more than $400 billion or nearly 3%. Unemployment would be falling rapidly and the U.S. economy recovering more rapidly but for the trade deficit with China and Beijing's currency policies. Longer term, China's currency policies reduce U.S. growth by one percentage point a year. The U.S. economy would likely be $1 trillion larger today, but for the trade deficits with China over the last 10 years. In negotiations with U.S. Treasury Secretary Timothy Geithner, China has suggested a 3% revaluation of its currency over the next year; however, such a small change would do little to change those numbers. In fact, because of Chinese modernization, the intrinsic value of China's currency rises each year. Hence, a 3% revaluation over the next year would not even amount to the change in yuan undervaluation. As the U.S. trade balance with China grew worse, Beijing could say "see exchange rates don't matter." President Obama must weigh much tougher action against Chinese mercantilism, or China's trade policies will impose slow growth and high unemployment on the U.S.