Trade Deficit

As I suspected, imports from China plunged in December, verified by this quote

Also contributing to the drop in imports was a 14 percent decline in purchases from China - Bloomberg

Actually, because consumer spending didn't soften until December, I was expecting a much smaller, single digit decrease. Since December's ugly holiday retail sales, I imagine imports from China have really fallen off the cliff. The rest of this year will reveal how dependent China is on exports. Last year, US imports from China were $321 billion. China's GDP was $3.43 trillion. That means we're over 9% of their economy. The loss of their export market will start a domino effect wiping out their economy. This year, they will have simultaneous collapses in their stock and real estate markets. Although it may never come to light, I believe that their currency reserves are also seriously impaired, given that most of the $1.5 trillion in toxic CDO's is still missing, and China was a huge buyer.

I think I bought FXP at the right time.