Where are the buyers at the Yard Sale of the Century?
These are among the strangest economic times we have seen. Commodity inflation is surging, with oil hitting new ($107.58) highs early and often, yet Treasury securities have yields so low they have not been seen since the early fifties. SWF’s have trillions of dollars, but they are doing little to redeploy them. The dollar hits new lows against the Euro and other currencies, yet there is little indication foreign corporations or governments are taking advantage of the situation to participate in the Yard Sale of the Century — that is, buying US equities.
There is a double whammy in doing so. Stock prices are down, so is the dollar, and equities will participate in future economic growth, plus a recovery in the currency when relative interest rates readjust. Logic would suggest that the foreign surplus entities should be on a buying spree in the US. Indeed, the recycling of surpluses is an economic necessity for the system to function. So where are the buyers at the Yard Sale of the Century?
March 27th, 2008 at 10:43 pm
The stock market is primarily a discounting mechanism. Most of the typical US stock’s price represents the market’s estimate of future earnings. In normal modern times, a company’s liquidation value is secondary.
So where are the buyers at the Yard Sale of the Century?
Eying the sitting and aspiring Presidents and the past, present and future Congresses?
March 28th, 2008 at 4:28 am
I bet that they are waiting to see who wins the election. We all know the consequences of the outcome either way and so do smart investors.