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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: Jeff Jordan who wrote (228388)3/16/2003 8:07:40 PM
From: UnBelievable  Read Replies (1) of 436258
 
Actually I Don't Think The Decision Is Up To US

I think the fate of the market is going to be determined by foreigners. In this week's Barrons Bill Gross points out that foreigners own 35% of U.S. Treasuries, 23% of corporate bonds, 14% direct interest in U.S. companies and 13% of U.S. stocks.

The question is going forward are they going to continue to want to.

Adding to the negative pressure on the dollar which has resulted from the problematic economic situation in the US as well as the Fed's stated policy of doing whatever it takes to avoid deflation (i.e. print as many dollars as necessary), is a growing sense of political risk for a foreign national or another nation of keeping ones assets in the US. In an increasingly charged geo-political environment the potential for the US to freeze or seize assets cannot be ignored.

The fate of the markets is clearly tied to the fate of the dollar. A falling dollar trumps the efforts of the market protectors in all but the shortest time frame.

The market reversal last week was led by a reversal in the drop in the dollar, which was caused by a massive intervention in the FX market on the part of Japan, in an attempt to save their market by suppressing the value of the dollar vs. the yen.

Unfortunately the Fed's ability to print dollars, and other central banks wish to sell dollars, is far greater than Japan's ability to buy them.
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