Skip to comments.If China can prop up the U.S. gov't by buying Treasuries, what effect will they have on our stocks
Posted on 01/16/2014 6:47:53 PM PST by RoosterRedux
I posted an almost banal article tonight on FR entitled...
China's Neway Valve (Suzhou) to be Listed On Friday, First in 14 MonthsThe bottom line of this matter is that some investors (me for one) have noticed that the U.S. stock markets seem to have a power beyond U.S. investors.
This raises the question...if China and India (and even Russia) can create billions within their own economies...why can't that wealth flow to stock markets which contain stocks which can and will benefit individuals living in such economies.
I say this because I bought a biotech ETF last week and have seen it climb 4%+ in only a few days.
Is this proof of anything? Well, no.
But, doesn't it stand to reason that China and India and Russia would invest in U.S. companies who are also serving their markets.
Not recommending such as investment at all...just curious!
You can infuse as much money into the stock market and economy as one wants. However without any real growth or demand the system will collapse. All the low interest rats, low inflation, and booming stock market may be one giant Ponzi scheme and when it comes time to settle up there won’t be enough money.
Foreigners will invest in the US when the US is a better deal than their own country. Thie is the situation with US real estate right now. I believe that Japan, Europe, and China will go down before we do. So to me it makes sense for them to park money here while their countries go down, then sell their American assets and go back to buying their own when their countries bottom out. (Then we will go down).
Sound really good!
Cheese and crackers man...haven't you done any corporate work?
China hasn’t bought any treasuries in over two years.
Of course I have. I was mostly was writing about individual investors. But there is a reason Suntory bought Jim Beam at this time. Suntory feels right now the dollar is stronger than the yen. When Japan, and the yen, go down in the next few years. they will still be getting dollars from Jim Beam. When Japan is on the bottom, they can sell Jim Beam if they want, for more valuable dollars, and buy up cheap yen assets.
Chi coms can’t eat dollars.
They need to unload them with out running up prices too much.
They have been good at manipulating commodity prices so far...
But dollars can only buy stuff sold in dollars, us stocks, us land,
us congress, us presidents (bj Clinton gave them sub technology)
May I ask if you wish to be added back to the list of true contributors? Or would you rather toss BS into the mix.
Interest rates have been climbing. Credit card companies used to offer 0% or 1.9% on balance transfers. Five to six months ago they went to 3.9%. Today I got an offer that jumped to 5.9%.
Sounds like the Fed is tapering. I had recently jumped back into the market and made some money. It’s backing off now, think I’ll get out again.
I don't think this was a currency move.
Suntory bought Beam because they liked the product.
Ehh? So Suntory decides to spend some devalued yen to buy a company in dollars.
Doesn't make sense.
Suntory bought Beam because in buying Beam it was buying Beam's U.S. markets...and Suntory must feel, that despite the currency translation, Beam has a value in Japan which is above the price they paid.
And, frankly, I think Suntory make a good investment in Beam...it is a distinctive flavor and a very good bourbon.
Chicoms are collecting interest every year on the Treasury bonds they own. That money is coming from hard working tax payers. The payments to service the debt from China, Japan & UK (3 largest holders of our debt) will continue for 50 years or more, since we can’t pay back a single dime of the principle. We won’t have a budget surplus for 50 years, which is the only way any principle can be paid back.
Can countries and companies grow enough to pay off the debt and benefit their investors (given these high stock values)?
That’s going to be a heavy lift.
I don’t think there’s enough cost cutting technology coming along in the next decades to allow that to happen and justify these high stock prices and multi-trillion sovereign debt levels. Many will suffer losses on their “ investments.”
That’s why I’m buying gold, and taking 3-D Pinter classes....
"Devalued" is relative. Right now it is 104 yen to the dollar. If three years from now it is 200 yen to the dollar, then they will have made a good investment on currency alone. Plus, as long a Jim Beam is profitable, they have a source of dollars, and can even get loans and sell bonds in dollars.
Right now the trend is for capital to flow to the USA for various reasons including that the next direction of the dollar is up.
LOl I think they have had control of our market for a while
they boost U/S when “positive” change happens.
Bribe our reps. when they...help........ban Alaskan oil...destabilize mexico......establish the “special economic zones...or disarm the pop.
most seem blind to their influence here ...they are here...they are supporting “progress”.
bet on it.
I expect China to at some time demand repayment for their loans. To accomplish this, look for democrips and republicants to deed huge swaths of ‘federal lands’ to the chicoms as payment.
LOl I think they have had control of our market for a while
Yeah there is some truth to that.
Hopefully the big oil plays will recapitalize the USA over the next couple years...No it will take a decade or more to recapitalize the USA.
A lot of wealth has been transferred out of the USA and a lot of ownership in this country has shifted to foreign hands.
It will take decades of positive capital flows to reverse the situation.
Good analysis, but you might have the exact order wrong. Why do you think Japan will go down before Europe?
I put them first because of their high level of debt and their demographic implosion. The US I put last because we are not as bad demographically, we have an energy boom, and dollars are the reserve currency. Europe I just put in the middle. I also think it is very possible China will go down before we do as well. They are getting old faster than Japan.