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Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: ild who wrote (168041)	5/24/2002 3:34:33 PM
From: ild	Read Replies (1) \| Respond to of 436258

Commercials shorted more AG and AU cftc.gov Covered some SP500 cftc.gov

To: ild who wrote (168041)	5/24/2002 9:07:53 PM
From: yard_man	Read Replies (1) \| Respond to of 436258

ild Thanks for posting that -- I would be very interested in a cogent rebuttal or support for the piece in there by Andy Xie -- especially what's below -- since we have heard so much on this thread for the potential of foreigners to "quit funding" our current account deficit. So far it hasn't happened -- borrowing costs have not went up -- I am starting to come around to mr. reaper's line of thinking on this ...our government can embark on even greater fiscal stimulus without hurting the appetite for our govmnt debt -- as long as the Asian countries don't somehow get their act together and start providing opptys for similar returns, no? >>No 'Sell US' Scenario Yet The case for a weak dollar rests on the huge current account deficit that the US incurs. Foreigners can't buy ever more US assets to fund its deficit. Further, the US stock market is stumbling. Shouldn't foreigners be getting scared and pulling their money out of the US, let alone putting in more? I beg to differ. A 'sell US' scenario is far from developing. While the US equity market is losing its appeal, US fixed-income instruments remain attractive to Asian investors, who fund most of the US current account deficit. Short-term rates are near zero in both China and Japan. Ten-year government paper yields less than 2% in Japan and 3% in China. The US 10-year Treasury is still yielding above 5%. At the short end, the Fed will likely put the Fed funds rate back to 4% by the end of 2003, which makes US fixed-income instruments even more attractive to Asian investors. East Asia now accounts for half of the US trade deficit. Oil imports account for about one quarter. With super low interest rates in East Asia, half of the US trade deficit is funded, in my view. The oil producers are unlikely to withhold funds from the US. They are all dependent on the US for political survival. The amount of adjustment needed in the US trade account is to shrink its deficit by about one quarter, which would restore the US dependence on East Asia for funding its trade deficit to the historical level. <<