WSJ: US Trade gap widens and China might decide to reduce investments in US Securities.

Our take: both news may cause problems for US economy:

 1. Large trade gap means that we buy more from other countries then we sell to them.
2. China was one of the biggest investors into US Goverment Securities and by doing that to finance US budget deficit. In case if China would decide to restructure their $1.07 trillion investments and move some portion of those assets from US Goverment securities to another investment vehicle US would have to come up with cash.

Both events may result in large outflow of US dollars from US to other countries which can potentially cause economical unstability and new wave of inflation.

Target: C, F & S Funds / Short-term: Neutral / Long-term: Negative
            I Fund / Short-term: Neutral / Long-term: Positive