Investors should watch trade numbers for reliable signs of the real value of last week's trade agreement between the U.S. and China, writes Dr. Michael Ivanovitch.
Unacceptably large U.S. trade deficits with China will continue in the absence of Beijing’s firm commitment to balance the bilateral trade flows.
Markets will have to take that in stride, focusing on the fact that asset prices are determined by the Federal Reserve’s monetary policy. If that's all Beijing is offering, its exports to the U.S. would have to be halved from their current annual rate of $462.4 billion to reach a meaningful narrowing of the U.S. trade deficit with China.The sad truth is that the U.S. will continue to run huge wealth transfers to China financed by America's increasing net foreign debt that will show as net foreign assets on China's books.
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