Its interesting when one of our past discussions comes back around again. Here’s some odds and ends that are just now heating up in the Mainstream Media.
Readers of this blog should recognize them these topics:
There may be others — but it was weird yesterday, running into 4 of these in a row . . .
Now that I’ve patted myself on the back, let’s look at one I got wrong/missed:
I had previously noted that overseas net purchases of U.S. securities totaling $91.5 billion in
January, and that was a positive. While that headline may be technically true, drilling below reveals something more troublesome:
The troubling news was that 41 percent of the buying came from Caribbean countries, with much of that from hedge funds based there. The funds could easily reverse their positions and sharply lower the flow of money into the United States in the months ahead.
This possibility appeared to have been partly responsible for the drop in Treasury prices yesterday and the rise in yields. The dollar also slipped against the yen, falling to 104.45, from 104.93 Monday.
Another surprise in the Treasury Department data was that American purchases of foreign stocks and bonds nearly ground to a halt. Because the purchases are counted as an outflow, the slowdown was the other reason net inflows were so big. Like hedge fund flows, this trend could also reverse quickly.
I suspect that this info was at least as much responsible for yesterday’s sell off as was GM’s preannouncement.
It always pays to go beyond the headline and read the actual data . . .
Foreign Capital Inflows Rise (But Read the Small Print)
NYT, March 16, 2005