Martin Weiss, Ph.D. examines the Chinese marketplace and the continual growth in China's trade surpluses. In this issue of Money and Markets, Dr. Weiss discusses the U.S. trade deficits and the increasing trade surpluses in China and other countries experiencing growth.
Jupiter, Fla. (PRWEB) May 17, 2007 -- Martin Weiss, Ph.D. examines the Chinese marketplace and the continual growth in China's trade surpluses. He discusses the U.S. trade deficits and the increasing trade surpluses in China and other countries experiencing growth.
Just this past Friday, the Dow Jones Industrials closed the day with a 111-point gain (0.84%), exchange traded funds tied to key East Asian markets put that gain to shame.
- The Singapore ETF (EWS) rose at triple the pace, the equivalent of 361 points on the Dow.
- The Hong Kong ETF (EWH) surged four times more, the equivalent of 498 points on the Dow.
- The most widely traded China ETF (FXI) catapulted skyward by 5.5%, the equivalent of a 727- point surge in the Dow!
- The competing China ETF (PGJ) did even better, exploding by 740 Dow-equivalent points!
But now:
- It may be too late to jump into the China ETFs. Buying in the wake of the giant Friday up-swell would not be prudent.
- It's also probably too late to buy options on these ETFs. They've more than doubled in value in just in the last few days.
But remember: No market moves straight up; it's possible to see a temporary correction; so wait for that correction. Not all markets move exactly in tandem. For example, other ETFs, like those tied to the Singapore and Hong Kong markets, are lagging China's and could soon start catching up. Look for markets that will lead the next wave.
The Powerful Forces Behind This
Phenomenon Are Still Firmly Intact
"I'm referring to America's massive trade deficits, China's massive trade surpluses, and the great wealth transfer they're creating," Dr. Weiss advises.
According to Dr. Weiss:
In the U.S., the Commerce Department has just reported that the U.S. trade deficit shot up in March to the highest level in six months, driven by a big jump in imported oil. The red ink ballooned to $63.9 billion, up by a bigger-than-expected 10.4 percent from the February level. Meanwhile, in China, the government just announced that its April trade surplus more than doubled from March, surging to $16 billion in black ink, compared to $6.9 billion the month before. More capital being drained from the U.S.; more wealth flowing to China!
The Greatest Wealth Transfer of Modern Times
"I've shown you a symptom of this phenomenon as revealed in one day's surge in global stock markets and I've shown you the gap in terms of one month's jump in America's trade deficit, coupled with an even bigger jump in China's trade surplus," Dr. Weiss says. Back in the1960s, the U.S. still had respectable trade surpluses peaking at $6 billion in 1964. But then, in the early 1970s,
- Nixon presided over the first big trade deficit $5.4 billion in 1972.
- Carter multiplied Nixon's big deficit five fold, giving us $30 billion in red ink in by 1978.
- Reagan multiplied Carter's deficit another five-fold, digging us into a $152-billion hole by 1987.
- Clinton more than doubled Reagan's worst trade year, letting the red ink flow to the tune of $377 billion!
- Under Bush, our deficit has doubled again, surpassing $763 billion last year 140 times bigger than the worst U.S. trade deficit under Nixon.
Meanwhile in China,
- Ten years ago, China had a trade surplus of only $12.3 billion.
- For the next eight years, China's trade balance grew, with a surplus of $32.1 billion recorded in 2004.
- And then, China's trade surpluses experienced an explosion, driving the surplus to $177 billion in 2006.
The pieces all fit together, and the numbers speak louder than words. In contrast, those who take protective action at home and diversify abroad, the opportunities are boundless.
"In China, the economy galloped ahead at the annual clip of 11.1 percent in the first quarter. And the Beijing's State Information Center forecasts 10.8% growth. In Brazil the Brazilian real continues to be the fastest rising major currency in the world and Brazil's trade surplus surged to $4.2 billion in April. In India, investors are enjoying a new stock market rise, as the country's industrial production surged by nearly 13 percent in March. And in Australia, rapid wealth accumulation is a consequence of 16 years of expansion without interruption," exclaims Dr. Weiss.
For more information and to read the full article, visit this link:
http://www.moneyandmarkets.com/press.asp?rls_id=782&cat_id=6&
About DR. MARTIN WEISS & MONEY AND MARKETS
Money and Markets (www.moneyandmarkets.com) is a free daily investment newsletter from Dr. Martin Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Weiss Research, Inc. is located in Jupiter, Florida. For more information about our editors, or to set up an interview, please contact Jennifer Moran at 561-627-3300 or visit www.moneyandmarkets.com.
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