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To: pater tenebrarum who wrote (22285)	9/27/2000 2:29:17 PM
From: Ilaine	Read Replies (1) \| Respond to of 436258

Heinz, this is from the most recent available for free TrimTabs, unfortunately that means it's three weeks old, but I would be interested in your comments, especially in light of the fact that the Euro seems to be rallying slightly. >>Foreigners Invested $125-$135 Billion in US Stocks Between May and August Just saying that cash takeovers boosted liquidity misses a key factor. Of the $129 billion of newly announced cash takeovers between May and August, foreigners accounted for $75 billion, or 58%. (For comparison, of last year's $233 billion of new cash takeovers, foreigners bought $45 billion, or 19%.) Add to that cash takeover total an estimated $50 to $60 billion of foreign direct buying of US stocks between May and August, and foreigners have added $125 to $135 billion to the US equity market. (Prior to the US Treasury reporting that in June foreigners bought $17.8 billion of US equities, we had been estimating foreign buying at $10 billion monthly. We now boost that estimate to $12.5 to $15 billion monthly -- and that still might be low.) In other words, the main reason the US market is up all of 4.7% since the end of April is that foreigners have bought a whopping $125 to $135 billion of US stocks. Historically, each dollar of net new cash has boosted the overall market cap 15 to 20 times. That translates to, without the foreign cash since May, the US market could now be at least $2 trillion lower or perhaps as much as $3 trillion. One reason for the surge of foreign buying is the slump in the Euro, down 25% since its debut at the start of 1999. Our guess, not being foreign exchange experts, is that the surge in European buying of US stocks is in part driving the Euro down as cash leaves Europe for the US. Therefore, no surprise that the Euro made a new low the same day the Credit Suisse-DLJ deal was announced. What Will Happen If Foreigners Stop Buying & Start Selling? Going forward, as long as Euro-land keeps buying US stocks, the US market should be OK. But what happens if they stop buying. Indeed, what will happen if they start selling? One smart client of ours tells us that he expects that could happen as soon as the end of September. The reason? The European Telco's have to finance not only the expensive 3G spectrum they just bought, but also the buildout of those systems. Our friend says he expects Euro-land Telco's to try and sell $30 to $50 billion of debt and equity here in the US starting at the end of September and lasting through October. Indeed, our friend says he would not be surprised to see the Euro start to rally against the US$, as a result. New Offerings Just Through August Already Top Last Year's $180 Billion Record. Add to the potential supply from Euro-telcos an expected record new offering calendar plus huge amounts of insider selling, and the new supply of shares could be more than the US market can handle. Indeed, August's $20.9 billion of newly printed shares, put the 2000 new offering total over the $180 billion sold during all of 1999. What's more underwriters reportedly already have a record amount of new shares in the pipeline looking to get sold this fall. All of that's why a potential rise in the Euro could be devastating to the US stock market.<< trimtabs.com