Comments on: THE BIG MONEY IS TURNING BEARISH

By: bm

bm — Tue, 03 Nov 2009 06:09:10 +0000

institutional investors generally invest in the equities between novto may,so we still have to wait to see what fourth quarter earning will bring

By: ShortBus

ShortBus — Thu, 29 Oct 2009 22:28:29 +0000

Don’t hate on the foreigners.

There are plenty of top tickers in the good ole US of A.

By: DH

DH — Thu, 29 Oct 2009 18:37:14 +0000

Foreign buyers are right up there with corporate share repurchasers in terms of prescience. When they start piling in, the market is almost always about to top out.

By: Rob

Rob — Thu, 29 Oct 2009 13:12:26 +0000

I agree with Jack. The dollar is the primary driver of the equity market since August.

The other support of equities is the lack of any other asset class with a bright long-term future return. Equities may be overpriced now (maybe 10%-20%), but provided we don’t go into a depression, they are less overpriced than government bonds, corporate bonds, most commodities (which appear to me to be up near bubble territory again) and gold (which is really bubbly unless inflation spikes to double digits).

One comment: How did Goldman Sachs get the GDP report so WRONG? Or was that a headfake so they could buy the dip and get the shorts out in force so they can be blown out of their positions today? (I don’t short equities, but the GS GDP estimate revision gave me enough pause that I didn’t add any equity positions yesterday.)

By: JACK

JACK — Thu, 29 Oct 2009 11:56:45 +0000

“At the same time, non-US interest in US markets has picked up.”

Foreign buyers are the marginal stock buyer. No doubt because of the cheap dollar. If the dollar makes a stand and starts a sustained reversal because the FED gets a backbone and stops QE and/or raises rates early, this will crush the inverse dollar/equity risk trade. Plus, the marginal buyer overseas won’t be able to scoop up US equities so cheaply with devalued dollars. Suffice is to say I’m watching the dollar very closely.