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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: Sarmad Y. Hermiz who wrote (8383)2/3/2003 5:20:20 PM
From: Lizzie Tudor  Read Replies (1) of 95757
 
Thanks very much Sarmad, Gottfried and all for your take on the dollar wrt stock prices.

I missed any discussion of this here on SI last year, I do agree that the talking heads didn't discover the issue until about august if I recall, after most of the damage was done!

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.


Actually, my experience in the early 90s was that technology companies did in fact sell a lot of stuff thanks to the lower dollar. And those sales weren't "profitless" if I recall (not sure where this comes from). Personally I think they have to revise the method for determining the trade deficit.

edit- wrt your opinion that increased sales due to lower dollar are dwarfed by foreigners removing funds from the US... imo this time around this process of repatriating money has been accelerated due to all the fraud and the uncertainty that Europe has about Bush policies. Last time we had a falling dollar europe did not bail out. (Japan lost a ton though). Lizzie
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