Great Wall Of Worry
China's trade slump worsened in December with their exports falling at the fastest rate in a decade. World leaders fear how Beijing will respond.
Specifically, December exports fell 2.8 percent from the same month a year earlier, after a 2.2 percent decline in November, the Chinese customs agency said. That’s the sharpest decline since April 1999, according to JP Morgan & Co.
The decline reveals how badly the financial crisis is hitting the world's fourth-largest economy and putting Beijing under pressure to do more to protect jobs.
“Right now they have a problem," says Dennis Gartman, “because unemployment is rising.”
A decline in sales has forced thousands of factories to close sparking unrest as laid-off migrants stream back to their hometowns from coastal manufacturing regions without jobs or money. Labor protests have occurred in some areas and the response from Beijing has been to pressure companies not to cut more jobs.
”They are going to be a society of 18-40 year old males who are out of work and without the stabilizing factor of women,” adds Gartman. (He’s referring to China’s highly controversial one child policy). “I can’t help but wonder if it leads to some sort of military solution.”
Tim Seymour is far more bullish on China and he thinks they will recover quickly. “This is an aberration. It’s still a growth story,” he says.
And if you’re looking for a trade in the sector Seymour suggests looking at Baidu or the iShares FTSE/Xinhua China 25 Index .
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Trader disclosure: On Jan 13, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Najarian Owns (CSCO) Stock; Najarian Owns (CSCO) Short Calls; Najarian Owns (MSFT) Stock; Najarian Owns (MSFT) Short Calls; Najarian Owns (DNA) Calls; Najarian Owns (XME) Calls; Najarian Owns (NVLS) Calls; Najarian Own (NVDA) Calls; Najarian Owns (MS); Najarian Owns (MS) Short Calls; Najarian Owns (MS) Put Spread; Adami Owns (AGU), (C), (BTU), (GS), (INTC), (MSFT), (NUE); Seymour Owns (BAC), (EEM), (F), (INFY), (EDC); Seymour's Firm is Short (PBR); Finerman's Firm Owns (AEO), (MSFT), (DNA); Finerman's Firm Owns (MSFT) Put Spreads; Finerman's Firm Owns (DNA) call spreads; Finerman's Firm Is Short (IYR), (IJR), (IWM), (MDY), (SPY), (USO), (ANF), (DSX)
Gartman's Canadian Fund is Long The Shanghai Index