Etaoin
05-08-2003, 09:17 AM
Excerpted from The Daily Reckoning (no link)
"Foreign interest in U.S. securities appears to be
buckling," notes Morgan Stanley's Rebecca McCaughrin. "Net
foreign purchases of U.S. securities plunged to $21.8 billion
in February, roughly half the level in January and the lowest
level seen since the emergence of a string of corporate
accounting scandals early last year...The risk that
foreigners are souring on U.S. assets is becoming a more
acute concern. While we do not believe that February will set
the pace for the remainder of the year, we are dubious that
foreigners will step up their investment to the $50 billion
per month needed to finance this year's yawning deficit."
- The Prudent Bear Fund's Marshall Auerback agrees. "Recently
released figures from the U.S. Treasury...demonstrate an
increasing propensity by private investors abroad to sell
dollar assets including U.S. equities," says Auerback. "The
U.S. Treasury...indicates that there was net selling of
$4.74bn of Treasuries by the foreign sector [in February],
the first net selling since April 2002. More revealing was
the actual composition of the flows: Large net Treasury
buying from Japan ($5.58bn) and China ($1.80bn)...has been
[offset by] selling from the Euro area (-$3.4bn), the U.K. (-
$2.9bn) and Canada (-$1.9bn)..."
- Even more troubling, says Auerback, is the fact that Arab
nations have become large net sellers of U.S. assets. Is it
payback time? Are Arab countries, principally Saudi Arabia,
exacting a sort of monetary revenge against the United States
for meddling in their backyard? It's possible, says Auerback,
and it could be very bad news for the dollar...To diversify
even a small proportion of this money out of dollars is quite
relevant in the context of threats to the external value of
the currency.
- If stocks are such a great buy right now, why are so many
insiders selling? Last week, according to SEC filings, only
two corporate insiders purchased more than $1 million worth
of their own companies' shares. By contrast, 65 insiders SOLD
more than $1 million worth of their stock...Hmmm, seems a bit
lopsided. Microsoft founder Bill Gates, who topped the list
of selling insiders, added a few feathers to his nest by
cashing in $410 million worth of Microsoft stock. Such sales
are somewhat routine for the mega-billionaire.
"Foreign interest in U.S. securities appears to be
buckling," notes Morgan Stanley's Rebecca McCaughrin. "Net
foreign purchases of U.S. securities plunged to $21.8 billion
in February, roughly half the level in January and the lowest
level seen since the emergence of a string of corporate
accounting scandals early last year...The risk that
foreigners are souring on U.S. assets is becoming a more
acute concern. While we do not believe that February will set
the pace for the remainder of the year, we are dubious that
foreigners will step up their investment to the $50 billion
per month needed to finance this year's yawning deficit."
- The Prudent Bear Fund's Marshall Auerback agrees. "Recently
released figures from the U.S. Treasury...demonstrate an
increasing propensity by private investors abroad to sell
dollar assets including U.S. equities," says Auerback. "The
U.S. Treasury...indicates that there was net selling of
$4.74bn of Treasuries by the foreign sector [in February],
the first net selling since April 2002. More revealing was
the actual composition of the flows: Large net Treasury
buying from Japan ($5.58bn) and China ($1.80bn)...has been
[offset by] selling from the Euro area (-$3.4bn), the U.K. (-
$2.9bn) and Canada (-$1.9bn)..."
- Even more troubling, says Auerback, is the fact that Arab
nations have become large net sellers of U.S. assets. Is it
payback time? Are Arab countries, principally Saudi Arabia,
exacting a sort of monetary revenge against the United States
for meddling in their backyard? It's possible, says Auerback,
and it could be very bad news for the dollar...To diversify
even a small proportion of this money out of dollars is quite
relevant in the context of threats to the external value of
the currency.
- If stocks are such a great buy right now, why are so many
insiders selling? Last week, according to SEC filings, only
two corporate insiders purchased more than $1 million worth
of their own companies' shares. By contrast, 65 insiders SOLD
more than $1 million worth of their stock...Hmmm, seems a bit
lopsided. Microsoft founder Bill Gates, who topped the list
of selling insiders, added a few feathers to his nest by
cashing in $410 million worth of Microsoft stock. Such sales
are somewhat routine for the mega-billionaire.