As goes China...

so goes the world? A 5% drop in Shanghai today. China has led the markets at major turns, topping first in 2007, bottoming first in 2008 (U.S. markets didn't bottom until 2009), short-term topping again in August 2009 (U.S. markets in January 2010). The May 2010 sell-off which included the flash crash was already underway in China for about two weeks.

On the trade front, the U.S.-South Korea trade negotiations is a good indicator of the mood. Korea is a U.S. ally and its economy is large, but with 50 million people, its not the jobs threat that people imagine when thinking of the 2.5 billion people in China and India.

SKorea, US fail to finalize stalled trade deal

Here are the two relevant points: it's the largest trade deal since NAFTA and it was negotiated right as global markets peaked.
The two sides have been holding negotiations this week to jump-start the deal to slash tariffs and other barriers to trade that was signed in 2007 when previous administrations were in power. It remains unratified by lawmakers in both countries.

...The White House says the deal could add at least $10 billion to U.S. gross domestic product and boost exports to South Korea by $10 billion to $11 billion a year. It would be the largest U.S. trade deal since a 1994 agreement with Canada and Mexico.

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