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My first guess would be that a majority of those investments would be in
Government securities. I would be surprised if much went into equities, per
se.
> -----Original Message-----
> From: owner-metastock@xxxxxxxxxxxxx
> [mailto:owner-metastock@xxxxxxxxxxxxx]On Behalf Of HARELSDB@xxxxxxx
> Sent: Monday, August 24, 1998 8:46 PM
> To: metastock@xxxxxxxxxxxxx
> Subject: How about that trade deficit?
>
>
> The USA has been running a substantial trade deficit since the
> early 1980s.
> Trade deficits, or more precisely, current account deficits, must
> be balanced
> by capital account surpluses. That is, the dollars that foriegn companies
> earn in the US must be converted into the foriegn currency by
> banks and the
> banks must turn around and invest those dollars. The US stock
> market has been
> a good place to invest dollars over the last few years. Steve K.
> mentioned an
> absent minded professor that thought the baby boomer's 401k money
> was going to
> save the bull market. I am wondering about significance of the
> trade deficit
> with regard to to the stock market in general and the baby
> boomer's 401k money
> in particular.
>
> 1. Qualitatively or quantitatively speaking, how much of the
> bull market in
> U.S. equities from essentially 1982 to the present can be
> attributed to the
> U.S. current account deficit?
> 2. How does the U.S. current account deficit (capital account surplus)
> compare with the capital being saved by baby boomers? I have
> information that
> indicates that NET foreign purchases of U.S. stocks were 29
> billion dollars in
> the first quarter of 1998. I don't have comparable information
> for purchases
> of U.S. stocks by domestic capital, but, I am guessing they are
> dwarfed by the
> foreign purchases.
> 3. How can I write a simple Metastock system to take advantage
> of the U.S.
> current account deficit as a global, macroeconomic phenomena?
>
> Thanks for your thoughts,
>
> Dan
> Pocatello, ID USA
>
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