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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Jim Willie CB who wrote (25546)	1/30/2005 1:09:47 PM
From: Michael Collings	Respond to of 110194

I agree, why would anyone bother to have a repatriation bill if there wasn't billions of dollars to be repatriated? I suspect this is going to hold up the dollar for the next six months or so. As far as Buffet, Soros and Gates.... they build their positions for a longer term not for a quick trade. I have to believe foreigners are also away of the "80" support level and defended it at last year's end because they were aware of the repatriation bill. Why would they let US multinationals benefit with a low dollar? I think our "contra" dollar holdings are in for a bit of a rough ride. Even more so due to the relatively peaceful Iraqi elections. All this talk from the Chinese while they are purchasing our dollars is a little odd. Perhaps they will sell a bit into US Multinationals? I moved out of gold holdings on Thursday. Plan to buy them back around July or August. I'll continue to sit with oil holdings though.

To: Jim Willie CB who wrote (25546)	1/30/2005 2:26:37 PM
From: mishedlo	Respond to of 110194

A Eurodollar is US$ The Eurodollar futures contract is for interest paid on those US$

To: Jim Willie CB who wrote (25546)	1/30/2005 4:16:41 PM
From: Oblomov	Respond to of 110194

JW, I don't know the answers to all of your questions. It was my understanding that the assets were mostly held in USD outside of the US. The issue was the taxation of assets generated by a foreign subsidiary being transferred back to the US parent company. Most of the cos would have had to pay taxes on repatriated assets at the highest corporate rate (35%), but the tax bill allow them to repatriate them at a 5% rate. But, I could be wrong about whether the assets were held in USD or some other currency. Eurodollars are just dollars held outside the US banking system., usually in US treasuries. Since there are exchange costs and (at least historically) higher risk outside the US banking system than inside, the Eurodollar usually trades at a slight discount to US treasuries (this spread is called the TED spread). There have been some exceptions such as in the late 70s, when the Ted spread was positive for a while.

To: Jim Willie CB who wrote (25546)	1/30/2005 4:42:31 PM
From: 8bits	Read Replies (2) \| Respond to of 110194

""multinational operation assets already held in US$ ??? that sounds inconsistent and incorrect each passing month at earnings time, we hear of multinatls enjoying a lift from conversion of foreign earnings into US$ if that is so, then that implies they were held in foreign currencys not in USDollars"" Not necessarily. The sales of those items are in the foreign currency but you do not have to hold that currency after the transaction is completed. (And in the case of all of the Asian and Latin American Currencies for much of the 90s that would have been a bad idea. As for Africa or Russia, Forgetaboutit..) The only currencies I would have trusted in the 90s would been the German Mark, The Pound, the Swiss Franc, and the US Dollar. During the switchover to the Euro there was tremendous doubt about the viability of the monetary union. Indeed the Euro initially weakened against the dollar, I would bet that during this a fair portion of European currency holdings by US companies were converted to Eurodollars. In terms of your question about increase profits from currency weakness (Your own) Say for example the Euro and the Dollar are at parity in year one. Your company has $1,000,000 (and 1,000,000 Euro) in sales in Euroland in the final quarter of year one. Profit would be say Euro 200,000 (Euro 1,000,000 - Euro 800,000 expenses). Fast forward to now, 1.3 dollars = 1 Euro. For the last quarter your sales were flat compared to year one in Euros, IE 1,000,000, however that means that your sales on the average for the last quarter were $1,300,000. Profit would be Euro 1,000,000 - Euro 820,000) Profit then is Euro 180,000 which in dollar terms is $234,000. A greater than 15% increase in dollar profits even when your margins are less than year one.