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Wow,
That is amazing bruce. Wow, I am flabergasted.
This is just stunning.
-----Original Message-----
From: BruceB <bruceb@xxxxxxxxxxxxx>
To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
Date: Sunday, February 21, 1999 12:51 PM
Subject: Re: tbond v. us$ divergence?
>Steve, you're completely right about the inaccuracy of the trade deficit
>number. In fact, the problem is much worse than you described. The trade
>number released to the public is technically known as the merchandise trade
>deficit, and the word "merchandise" is very important (even though most
>people drop it when discussing the number).
>
>The government bureaucrats, in their infinite wisdom, decided that the
>proper way to measure foreign trade was to only count the physical value of
>merchandise changing hands. In other words, they decided that there is no
>place for intellectual value in the trade figures.
>
>For instance, when Microsoft sells a Japanese software store a copy of
Win98
>for $50 (who then in turn sells it to a customer for $90), does the US get
>credited with $50 towards the trade balance? No. We get credited with
>about $6. Why? Because $6 is the value of the physical merchandise (the
>box, the manual, and the Win98 CD) that was actually shipped to Japan! The
>fact that Microsoft actually received $50 is considered irrelevant to the
>bureaucrats.
>
>If the true value of US goods exported were used, Microsoft alone would
>probably knock about 1 billion off the so-called US trade deficit. Now
>apply that same logic across the entire software industry, the music
>industry, the movie video industry, etc., and you'll see we're talking
about
>some serious money here.
>
>I used to think the trade deficit figure at least had some merit in regards
>to its trend, but even that is becoming suspect. As intellectual goods
>become a larger and larger percentage of US exports, the bias against the
US
>in the trade figures gets worse.
>
>Your tax dollars at work...
>
>Bruce
>
>
>-----Original Message-----
>From: swp <swp@xxxxxxxxxx>
>To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
>Date: Sunday, February 21, 1999 8:21 AM
>Subject: Re: tbond v. us$ divergence?
>
>
>>Usually, when we buy directly from a foreign producer, such as Japan, we
>>pay them in yen anyway. Heck, I get paid in dollars from my foreign
>>customers, and when I pay my Swiss back-up data provider, I get charged
>>in CHF. So, the weak dollar from trade would then be more immediately
>>apparent.
>>
>>The emerging markets work in dollars anyway. In fact, that is one reason
>>why the dollar is strong -- the continued dollarization of emerging
>>economies. Remember, a huge part of the deficit is with places like
>>China and Korea. They rather hold dollars as their exchange rates are
>>not declining. Another thing to remember as far as the trade deficit
>>goes, is that it is very deceiving. Much of the electronics and computer
>>stuff that goes as a deficit on the trade account is factories producing
>>for US firms. That winds up as being US profits. That is one reason why
>>the Asian contagion has not hurt our economy. Intel sells raw materials
>>in essence to itself in Thailand (or wherever) and buys it back. The
>>factory makes a bit, but most of the profits go to Intel.
>>
>>Ira wrote:
>>>
>>> With the largest trade deficit in history, based on an article I read,
>the
>>> sellers to the US have to convert to local currency at one point to stay
>in
>>> business, therefore sell US$. What do the sellers do with all those US
>>> dollars, borrow local currency against their dollar accounts ? If the
>dollar
>>> slides, then what happens to those US$ collateral accounts? Ira
>>>
>>> swp wrote:
>>>
>>> > Gary -
>>> >
>>> > The relationship between US investments and the dollar is very far
from
>>> > a direct one. First of all, you need to always remember that the
>>> > dollar's gains and losses are not just due to the bond or stock
market,
>>> > and for that matter, money will not necessarily flow into bonds or
>>> > stocks because the dollar is strong. The dollar is used as a medium of
>>> > exchange in trade, so part of the dollar's demand -- a large part of
it
>>> > -- is as a medium of trade.
>>> >
>>> > Right now, rightly or wrongly, alot of folks are worried that the Fed
>>> > could raise rates. Why would you own bonds if you believed that rates
>>> > were going to rise? You would probably buy time deposits. Notice that
>>> > the curve, I think, is steeper of late.
>>> >
>>> > There is much more to the story than that, and I do not pretend to
have
>>> > all the answers, but that might be part of it.
>>> >
>>> > Steve
>>> > --
>>> > Steven W. Poser, President
>>> > Poser Global Market Strategies Inc.
>>> > http://www.poserglobal.com
>>> >
>>> > Gary Funck wrote:
>>> > >
>>> > > the US$ made a big move up at the expense of the dmark and jyen
>Friday,
>>> > > but the bond was down a little (rates higher). This up-trend in
the
>>> > > US$ has been in place for a while, and the bond is testing the
bottom
>>> > > of its trading range.
>>> > >
>>> > > I thought that as the big players moved into dollars, they'd also
>tend
>>> > > to buy othe US$ denominated assets like the bonds, or stocks, but
>>> > > both US bonds and stocks have been looking weak of late. Does that
>>> > > mean the money is just 'parked' into US$ waiting to be deployed?
>>> > >
>>> > > Any ideas on the significance, if any of a stronger dollar, but
>weaker
>>> > > bond? Any opinions on the impact on US stocks?
>>> > >
>>> > > --
>>> > > | Gary Funck, Intrepid Technology, gary@xxxxxxxxxxxx, (650)
964-8135
>>> >
>>> > --
>>
>>--
>>Steven W. Poser, President
>>Poser Global Market Strategies Inc.
>>http://www.poserglobal.com
>>
>>Tel: 201-995-0845
>>Fax: 201-995-0846
>>Email: swp@xxxxxxxxxxxxxxx
>>
>
>
>
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