Good news on Asian trade pact, bad news on global trade

Good news came over the weekend that an agreement was reached on the Trans-Pacific Partnership (TPP) in a trade pact that covers 12 countries, 800 million people, and almost 40 percent of the global economy. Global trade is so important to global growth that it can be categorized as one of the five "tectonic shifts" that ultimately drive markets.

This certainly is progress but an "agreement" does not mean ratification - legal contract - by all of the countries, in particular the U.S. Congress. This free trade pact though would be the biggest for the U.S. since NAFTA and a good step to bolstering U.S. and global growth as trade has been languishing.

In fact, the World Trade Organization cut its global growth forecast to 2.8 percent down from 3.3 percent in part due to prospects for global trade. The 12 member nations of the TPP include Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam and the U.S benefiting both Emerging Markets and developed economies.

"Meanwhile, the latest trade data reported a 2 percent drop in exports (MoM) pushing the U.S. trade deficit to a five-month high of $48.3 billion. Imports rose 1.2 percent, but are down 2.2 percent from a year ago. This is despite a strong dollar making foreign goods cheaper for U.S. consumers and is reflective of that downward trend in global trade", says Voya Global.