John Pitera's Market Laboratory Message Board

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Strategies & Market Trends : John Pitera's Market Laboratory

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To: Hawkmoon who wrote (5495)	2/5/2002 5:08:08 PM
From: John Pitera	Read Replies (2) of 33421

I think a "stimulus" package is still probably warranted. here is the url for the mack daddy flow of funds pdf. yardeni.com If you look at Yardeni's chart #1 you can see how corporate and private borrowings have soared since 1996, and we've been lucky that the US govt had been running big surpluses, surpluses fueled by soaring tax receipts and earnings from a soaring stockmarket. chart 10 shows how the foreigners have been big time net buyers of US stocks on balance since 1995, and they bought US stocks very heavily from late 1998 going into Q3 of 2000. chart 16 shows how direct foreign investment has been rising since 1992 and has soared since 1998. This helped to fuel the Massive move in the NASD from 1997 to March of 2000. If the foreign money, flees and we go back down towards 100 billion dollars of direct foreign investment, this then could cause a turn downward in the USD, it would put downward pressure on US equities and the renewed borrowing interest by the US government plus foreign selling of US debt and Dollar denominated assets could well put upward pressure on US interest rates. Gold's advance to 299 this week may be telegraphing some of these future possible developments. The USD has been a big beneficiary of the lack of a strong global currency alternative. There still may not be a strong alternative to keeping assets in US Dollar assets and this would soften the blow of the other debt and borrowing issues. The Japanese equity market is at a new 18 year low today. The Japanese still seem to want a lower currency to help them extricate themselves from their banking and debt malaise. A number of years ago the Nikkei and the DJIA were both at 1000. The winner who guesses the closed to the number that these 2 averages next converge, gets a week of cyber pizza's. -g- John

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