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Strategies & Market Trends : Stock Attack II - A Complete Analysis
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To: donald sew who wrote (16453)8/23/2001 3:22:56 PM
From: isopatch  Read Replies (1) of 52237
 
Hi Don. <amount of foreign money in the US BOND market>?

According to Steven Roach, chief economist with Morgan Stanley, 40% of all US treasury securities are owned by foreigners.

Even a moderately significant exodus by them from our bonds, notes, and bills would be put upward pressure on interest rates and drive our economy deeper into an inflationary recession (aka stagflation) as the Fed would desperately try to hold short term interest rates down via their open market desk buying larger quantities of Treasuries than we've yet seen. The resultant liquidity injected into the monetary system would increase money supply growth beyond the current pace which is a 20 year high! That would then increase inflationary expectations and drive the dollar down which would encourage more foreigners to exit our bond market and the dollar. Truly a vicious circle. And IMHO, it's already started.

That's why the gold stocks are an important LT investment vs simply a ST trading play.

Forecasting beyond a few days is really a fundamental analysis process - per the above - vs the TA we find so valuable in ST work.

Continue to enjoy reading your work. But don't have much time to post lately.

Best regards,

Isopatch
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