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US Residents Dispose Of $29 Billion In Foreign Securities In July
An interesting money flow observation dervied from yesterday's TIC report is that as US residents were pumping money into domestic capital markets, they were aggressively pulling capital out of foreign stocks and bonds. In fact, in July, foreign equity purchases declined by $14.5 billion, while foreign bond purchases dropped by $14.2 billion, or a $28.7 billion combined. What is more notable is that on a TTM basis, the decline was much more pronounced, and from a combined $63 billion in June, the number has dropped to basically flat, at only $1.6 billion. As the chart below demonstrates, there is potentially up to another $200 billion of foreign capital repatriation by domestic investors. Ironically, with the US capital markets behaving more like an Emerging Market, courtesy of the domestically-funded dollar carry trade it is likely that much more capital reallocation will continue to come into US securities.
Which begs the question how are foreign markets so well bid even as American capital is fleeing in droves? And the answer, of course, is in every country's central bank response in attempting to mimic the Chairman's QE program. The entire world market is now one big Ponzi.
Another relevant question is, what are the benefits to the US economy as the dollar collapses further? At least Japan was a net exporter of a whole variety of products and had a trade surplus. As the US has not been a net exporter in decades, there is absolutely no benefit from a cheap dollar, and the long-term impact on GDP will only be negative. However, at least banks will benefit as excess toxic debt will be debased, while more and more of the domestic economy crumbles and profit margins shrink with ever more expensive foreign made products flooding the nation.
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$25,450 million purchased by fed in the last week through their agency mbs program.
I like your thinking here. That move to 108.06 this morning may have been the blow out top this market needed to hit in order to head lower. Tough to say whether tomorrow will be a confirmation or not with quad witching, but perhaps into next week this move will play out as a reckoning.
just remeber to hedge that reason and logic with sheer stupidity.
Dollar debased until Gold hits $2500, with offshore tankers holding down oil. Boom! Obama surprise as the gold-standard is reintroduced (temporarily of course), dollar rallies as the doors to Fort Knox swing open and enter liquidation mode. National debt solved. Supply hits the market, CBs, tin-hat gold bugs get flushed out and the stock is reaccumulated at $250. Fort Knox closed. Off-gold standard, back to printing. Rinse, repeat.
Do you really think there's gold in Fort Knox?
yes, but none of it belongs to the Treasury.
and now, back to reality. selling physical gold is the official act of surrender in this financial war and nobody within the earshot of anybody within an earshot of the guys that talk to the guys that talk to the Fed chairman or President is even thinking about it.
Of course, they have been known to surprise...
You are reading the report wrong. The title of the chart is Foreigners' Acquisitions of Long Term Securities. Line 14 is Gross Purchases of Foreign Securities from US Residents and Line 15 is Gross Sales of Foreign Securities to US Residents. Line 16 is Foreign Securities Purchased, net and the total is -28.8, but that is the net purchases of foreign securities from Americans by Foreigners.
Here's the link: http://www.treas.gov/press/releases/reports/tictable.pdf
Columns 17 and 18
Lines 17 and 18 are Foreign Bonds purchased from US residents and Foreign Equities purchased from US residents. Both numbers are net numbers, meaning that FOREIGNERS purchased NEGATIVE amounts of securities from US RESIDNTS.
In other words, US residents were net purchasers of foreign securities. What's so hard to understand?
That should read, "purchased NEGATIVE amounts of foreign securities from US RESIDENTS"
is this all hidden swiss account money flushing back to the states ?
What an excellent find.
Talk about a leading indicator!
It's one thing not to buy or sell, but to repatriate investment capital, at this point in the "recovery"!?!
The three legged stool of land,labor and Capital has termites.
"Another relevant question is, what are the benefits to the US economy as the dollar collapses further?"
In battle it is understood that there will be casualties and the objective is to ensure that if the battle cannot be won, then at least those in the command center will.
As a living organism the Superpower Of the Planet will attempt to save the vital organs while accepting that, and even contingency planning for, the loss of appendages and then limbs as circumstances arise/demand.
Looks like Ireland may be the first toe. I sure hope next months housing starts for them doesn't show an increase in apartment construction at the obvious expense of single family housing as the realization sinks in that one will be needed to the exclusion of the other in the years to come.