International Markets Look Vulnerable

With less than three weeks of trading left in 2006, are the international markets vulnerable? It looks that way. Most markets sold off on Tuesday and we will see what Wednesday brings. The potential threats of protectionism may be just that, threats. However, the possibility that Paulson and Bernanke visiting China signals the beginning of a new protectionist policy must be considered.

Remember Clinton is more of a Republican than Bush and given the inability of Bush to comprehend Economics 101 he could support traditional Democratic policies of tough trade talk. This would be scary. In a certain respect, tough trade talk makes sense when you consider the rather egregious copyright and patent violations of the Chinese.

Meltdowns often occur after political missteps occur. We would sell international funds or go short the EFA. Could investors get some coal instead of presents for Christmas?