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Technology Stocks : Semi Equipment Analysis

SOXX 348.67

+0.2%

Jan 22 4:00 PM EST

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To: Lizzie Tudor who wrote (8373)	2/2/2003 10:35:47 PM
From: Sarmad Y. Hermiz	Read Replies (3) of 95757

>> foreign activity which seems to be the real driver for the bear mkt according to the talking heads on TV. Lizzie, the talking heads caught on to this very late. We were writing about it here a year ago. However there was skepticism that there would be enough foreign selling to affect stock prices. There is only one process for the dollar to drop compared to Euro. And that is for foreigners to sell dollar assets and buy Euro assets. And at least some of those assets must be stocks. And in general we see that on days when the dollar is down, stocks are are down also. The TV experts kept proclaiming that a lower dollar is good for US companies because it will make exports cheaper. And therefore the increase in exports would lift US company profits, and then increase stock prices. The record trade deficits are a testimony to the low validity of that model. And even if exports had increased, we also now know that all these sales are apparently profitless, anyway. So the stocks suffered from the direct effects of dollar-asset dumping, without benefiting from the indirect effects of the lower dollar. So even if the TV talkers have noticed the effect of foreigners on stocks, it still has not made their contribution more useful than any lay person speculation. I have yet to see any discussion on "how many dollars must be exchanged for Euros in order to lower the dollar exchange rate by 1 penny". Or "how many $billions of foreign owned accounts were withdrawn from US banks in 2002 ?" Actually just a total of how much of US stocks are registered to foreign accounts will be very informative also. But I don't know if that information is available. The fact that this topic is never discussed in a quantitative way is a serious gap in our ability to make sense of the price movements. Sarmad

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