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Strategies & Market Trends : Zeev's Turnips - No Politics -- Ignore unavailable to you. Want to Upgrade?

To: t2 who wrote (79645)	6/16/2002 3:12:44 PM
From: augieboo	Read Replies (1) \| Respond to of 99280

I guess the dollar index will be worth watching as the main indicator of whether foreign money is still leaving the US. Sounds reasonable, but to tell the truth, I find the dollar/bond/foreign-investment matrix extremely puzzling. If foreign money is pulling out of the U.S., (which a lot of people seem to think at this point), then shouldn't bond rates be going up, in order to chase down those dollars that are left? But Treasury rates keep dropping, which, I believe means that someone is bidding the prices up, which suggests a net inflow of $$ into bonds. But from where? If it's U.S. $$$ being channeled from equities to bonds, and we combine that with $$$ moving from the financial markets to real estate, (another premise a lot of folks seem to accept), plus foreign $$ leaving the country, shouldn't the S&P be cratering as bad as the Naz? In other words, how can we be moving money out of the country and into real estate while simultaneously moving enough $$ into bonds to drive down bond rates without completely yanking the rug out from under the stock markets in general? Or, is that exactly what is happening, and I'm just so fixated on the Nassacre that it escapes me? Maybe the dropping dollar is helping to keep foreign money in the US, because, even though rates are down, U.S. bonds are cheaper for foreigners to buy, because they get more dollar bang for their Euro (or whatever). So, maybe a falling dollar index is not a good indicator that foreign money is leaving the U.S.? Maybe we need to look for rising longer term interest rates? I really don't have a clue, just a lot of questions!