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Halftime—Pro Trader: China to Lose Most From Japan Disaster

Thursday, 17 Mar 2011 | 1:22 PM ET

Following the disasters in Japan, trader Steve Cortes on Thursday said China is in "a lot of trouble."

China's relationship to Japan is very similar to Mexico's relationship with the U.S., said Cortes, founder of Veracruz. Like Mexico, China is a low-cost producer of goods that exports to its larger, richer neighbor, he explained.

"I am wagering that because of what's going on in Japan, China as a second derivative, is going to suffer very badly because what Japan needs now are things like wood, energy, aluminum — not things China produces," Cortes said.

Cortes added that China does produce some raw materials, including aluminum. However, he said it mainly produces shoes, toys and other consumer goods, which Japan is likely to import less of. That's a major problem for the People's Republic, whose second largest importer is Japan.

What's the Trade?

Cortes expects the iShares FTSE China 25 Index Fund , an exchange-traded fund that tracks Chinese assets, could continue to underperform. The FXI has already underperformed this year, he noted. In turn, he has shorted the FXI against the S&P 500 .

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CALL OF THE DAY

UBS lowered estimates on property and casualty insurers. The firm said the first quarter could be the worst for catastrophe losses since Hurricane Katrina.

Insurers Lower on Japan Fallout
UBS lowered estimates on property and casualty insurers, saying the first quarter could be the worst for catastrophe losses since Hurricane Katrina, with Brian Meredith, UBS analyst.

To better understand why UBS made this call, "Fast Money" spoke with ubs analyst Brian Meredith. Watch the video to see the full conversation.

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Trader disclosure: On Mar. 17, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Steve Cortes Owns (TM). Steve Cortes Owns (EXC). Steve Cortes Owns (SO). Steve Cortes Owns (SDY), Is Short S&P. Steve Cortes Is Long U.S. Dollar vs. Australian Dollar, Canadian Dollar, Japanes Yen. STeve Cortes Is Long Crude. Steve Cortes Is Short (F). Steve Cortes Is Short (C). Steve Cortes Is Short Gold. Steve Cortes Is Short Silver. Steve Grasso Owns (ASTM), (BA), (BAC), (C), (CSCO), (D), (JPM), (LIT), (LPX), (MHY), (NDAQ), (PFE), (PRST) and (S). Jon Najarian Owns (AAPL), Is Short (AAPL) Calls. Jon Najarian Owns (CBOE), Is Short (CBOE) Calls. Jon Najarian Owns (CNW), Is Short (CNW) Calls. Jon Najarian Owns (CME), Is Short (CME) Calls. Jon Najarian Owns (NYX), Is Short (NYX) Calls. Jon Najarian Owns (FCX) Is Short (FCX) Calls. Jon Najarian Owns (HPQ), Is Short (HPQ) Calls. Jon Najarian Owns (KWK), Is Short (KWK) Calls. Jon Najarian Owns (NKE), Is Short (NKE) Calls. Jon Najarian Owns (CHS), Is Short (CHS) Calls. Jon Najarian Owns (MTW), Is Short (MTW) Calls. Jon Najarian Owns (WNR), Is Short (WNR) Calls. Jon Najarian Owns (PAAS), Is Short (PAAS) Calls. Jon Najarian Owns (SLV), Is Short (SLV) Calls. Jon Najarian Owns (HK), Is Short (HK) Calls. Jon Najarian Owns (CSTR), Is Short (CSTR) Calls. Jon Najarian Owns (CRM), Is Short (CRM) Calls.

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STEVE GRASSO
Stuart Frankel & Co. And Its Partners Own (AMGN)
Stuart Frankel & Co. And Its Partners Own (CSCO)
Stuart Frankel & Co. And Its Partners Own (CUBA)
Stuart Frankel & Co. And Its Partners Own (GE)
Stuart Frankel & Co. And Its Partners Own (GERN)
Stuart Frankel & Co. And Its Partners Own (HPQ)
Stuart Frankel & Co. And Its Partners Own (HSPO)
Stuart Frankel & Co. And Its Partners Own (MSFT)
Stuart Frankel & Co. And Its Partners Own (NYX)
Stuart Frankel & Co. And Its Partners Own (PFE)
Stuart Frankel & Co. And Its Partners Own (PRST)
Stuart Frankel & Co. And Its Partners Own (SDS)
Stuart Frankel & Co. And Its Partners Own (XRX)
Stuart Frankel & Co. And Its Partners Own (SDS)
Stuart Frankel & Co. And Its Partners Own (UAL)
Stuart Frankel & Co. And Its Partners Own (XRX)
Stuart Frankel & Co. And Its Partners Are Short (QQQQ)
Stuart Frankel & Co. And Its Partners Are Short (AAPL)

DENNIS GARTMAN
Funds Manged By Gartman Are Short Euro, British Pound, Yen
Funds Managed By Gartman Are Long Crude
Funds Managed By Gartman Are Long Natural Gas
Funds Managed By Gartman Are Long Swiss Franc
Funds Managed By Gartman Are Long Australian Dollars

BRIAN MEREDITH
(VR) Is Or In Past 12 Months Has Been An Investment Banking Client Of UBS Securities LLC
(RNR) Is Or In Past 12 Months Has Been A Non-Investment Banking Client Of UBS Securities LLC (Securities-Related Services)
(RNR) Is Or In Past 12 Months Has Been A Client Of UBS Securities LLC (Non-Securities Services)
UBS Securities LLC Has Recieved Compensation From (RNR), (VR) In Past 12 Months

***ANALYST HAS DISCLOSED FOR: ACE, AXS, RE, RNR, VR

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