Net Foreign Purchases came at $116.8 Billion while the market was expecting $50.0 Billion – how does it affect Dollar?
Alan Hershey
Oct. 17, 2006

In the middle of all these heavy doze of market data, something very interesting data came out and very few people watched it. Net Foreign Purchases came at $116.8billion while the market was expecting $50.0 billion. In the prior month the net foreign purchases were at $32.9 billion. That’s a 250% increase!

That can be extremely bullish for US Dollar index. The demand for dollar normally lags a few behind the net foreign purchase figures. The analytics say the correlation is not accurate but dollar should get some help here.

The core PPI of 0.6% and relatively strong capacity utilization of 81.9% should make Fed think several times before taking any action on lowering rates. The European Central Bank’s recent approach to pause is also remarkable. That can be further for US Sollar here.

Net Foreign Purchases came at $116.8 Billion while the market was expecting $50.0 Billion – how does it affect Dollar?
Alan Hershey
The core PPI of 0.6% and relatively strong capacity utilization of 81.9% should make Fed think several times before taking any action on lowering rates. The European Central Bank’s recent approach to pause is also remarkable.
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The industrial production slippage of 0.6% contradicts NY Empire State Index of 22.9 –how will stocks, bonds, gold and dollar behave?
Marla Guthrie
Stocks though can falter because stock market is normally ahead of the curve and is predicting what will happen six months later.
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Chicago Mercantile Exchange buys CBOT for $8 billion– it can be a very bad sign for the economy and stocks
Peter Oberois
Another model that tracks smart money flow shows interesting results. Samrt money is buying very long term puts on the stocks.
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A lower capacity utilization of 81.9% can bullish for bonds but it confirms stagflation
Fred Day
The net effect is that Fed cannot lower the rates while economy needs the rates to go down. The effect can be devastating for stocks. Bond and dollar probably will gain from the effect.
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Producer Price Index fell amazing 1.3% while core PPI shot up 0.6% - what does that mean for economy, dollar, bonds and stocks?
Sam Adelton
Again and again the central banks have failed to fight stagflation. They overshoot chasing the inflation and cause eventual depression in the economy. Stagflations when fought with fiscal means end up in deflation and depression.
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The stubborn capacity utilization manifests strength of economy – Dow 15000?
Paula Zubeda
Till it reaches 85, the Fed has no reason to raise rates. And if that pause happens in the middle of a capacity utilization above 80%, it is super-bullish.
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A little change in core PPI says the inflation part of the stagflation is under control but inverse direction of stocks and bonds manifests start of a massive recession
Mike Moran
Lack of measures to correct the underemployment driven recession is dragging the economy down further. If slight inflation is suddenly changed into deflation (as happened in Japan in the last deade), the economy can be depressed.
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