• 2 days How To Invest In The Cybersecurity Boom
  • 4 days Investors Are Patient With Unprofitable Giants
  • 6 days Wells Fargo Back In The Scandal Spotlight Once Again
  • 8 days 5 Stocks To Keep A Close Eye On This Year
  • 9 days As Auto Giants Flail, Look To Chip Stocks For Gains
  • 10 days Central America Is Ready For The Bitcoin Hustle
  • 12 days China’s Video Game Restrictions Unlikely To Slow Down Booming Industry
  • 13 days Top Performing Stocks As Inflation Fears Grow
  • 14 days US Airline Stocks Take A Beating On New EU Restrictions
  • 15 days This IPO Could Open Sustainable Fashion Floodgates
  • 16 days Crypto Crime Nets Another $2B Fraudster
  • 18 days This Week’s Hottest Meme Stocks
  • 19 days Why World Markets Should Be Watching Germany Closely
  • 21 days Could ‘Cultured’ Meat Rival The Plant-Based Megatrend?
  • 24 days ‘Easy Money’: Crypto Is Still Attracting Newbie Investors
  • 25 days Foreign Syndicates May Have Stolen Up To $400B In COVID Benefits
  • 26 days Gold Jumps Above $1800 Ahead Of Jackson Hole Summit
  • 26 days International Banks Blacklist Afghanistan Following Taliban Takeover
  • 28 days China’s Tycoons Are Getting A Serious Reality Check
  • 29 days U.S. Cannabis Space Heats Up With Telling Tilray Acquisition
  1. Home
  2. Markets
  3. Other

Dollar Weakness and its Threat to the U.S. Financial Markets

Introduction
It's my long-established practice to publish an analysis each quarter of US financial assets purchased and held by foreign investors. The primary objective of the exercise is to keep a close eye on the vulnerability our markets would have to any serious decline in these flows. Or, the added vulnerability our markets would face if there was net liquidation by foreign investors of their US financial assets.

My analyses are timed to the Federal Reserve's release of its quarterly flow-of-funds data. Although the next release will not be out until the second week of December, I believe the recent slide in the dollar's exchange-rate value makes it advisable to revisit the Fed's most recent numbers, published in mid-September. For the purpose at hand, these are more than adequate.

On 9/16, the Federal Reserve released its latest "Z.1" ("Flow of Funds Accounts of the United States"), with data current through the June 2004 quarter. Although the numbers are subject to revision, the data are more than adequate for big-picture purposes. The Fed is due to release its next "Z.1" on 12/9, which will contain data through the September quarter.

More up-to-date numbers are available for most of the series discussed here. But for my purpose now, presenting the data and accompanying text as they were originally published in September is fine. I simply want readers to reflect on how extraordinarily large the numbers are, as well as on the magnitude and speed of their growth. As it relates to foreign holdings of Treasury and agency obligations, there are some current data later in the missive.

Many investors and analysts remain concerned about the United States' large and growing trade and current-account deficits, and whether foreign investors will continue to fund them in an orderly fashion. This is certainly a concern I have voiced on many occasions, with an accompanying warning that serious weakness in the dollar could significantly exacerbate the situation.

With this in mind, access, read and hopefully enjoy: "Dollar Weakness and Its Threat to the US Financial Markets".

Back to homepage

Leave a comment

Leave a comment