The net flow of investment into, and out of, the U.S. dropped into the negative on a month-on-month basis, the TIC data report shows today. Although a two month lagging indicator, it does put fuel on the fire of the 'Strong Dollar' administration policy that gets spouted at every turn.
The stronger the Usd gets, the weaker the economy read will be, in this stage of the global business cycle; and the administration does not want either. But, they do have to keep talking up their stance that the dollar will get protected, and will be unscathed, by the ravages of economic stimulus that has put the global economies in hoc for some time to come.
What this TIC report shows, however, is that overseas investors are possibly looking to reduce Usd exposure, after all, this was $30b away from the expected number. This is also the report that shows the numbers, that feed the U.S. Current Account overdraft. Unless Treasury Income Capital hits at a stronger rate than this, the U.S. will lose the ability to stimulate anything other than the sound-bite headlines.
This report may not lead to economic collapse, it may not create a new world order, but it will raise questions as to the sustainability of the ultimate fiat currency (one backed by just the goodwill of the issuer), that uses a 10% fractional banking system. The Federal Reserve back each Usd with trust, and then are permitted to maintain just 10% in reserve for each note out there.
This report clears up the reasoning, somehow, behind the decision that Alan Greenspan, the former head of the Fed, made that the production and publication cost of M3 money supply numbers was prohibitive. They are available, but do not now hit the mainstream headlines.
In a strange twist of economic fate, the lack of support for TIC data, may lead to a stronger dollar in the near-term, because right now the equity market leads forex valuations. If equity traders reject the buying opportunity today on the strength of dollar order flows from abroad, stocks could go down, and then a move is made to the safety of bonds, and going Long bonds equates to going Long dollars.
The saving grace may be today that we have seen fairly robust (relatively speaking) earnings reports, and that may just about be enough to divert attention long enough, for another 15 second sound-bite news flash to hit, that stimulates the addictive nature that has grown, demanding high impact, low content, one line sentences, that read like a coded messages;
TIC lower. Buy dollars. Explain later......... Dow Higher. Sell dollars. Bonds lower.... Oil Higher. Buy dollars again. No Reason......Close positions, I am putting a pie in the oven....and on it goes, a constant dribble of twitter that in general creates deafening noise, a lack of substance, and fosters a low attention span. Traders need to shut that flow off at times; it can be disabling, addictive, and requires constant reaction.
Instead of the TV, maybe think about turning on the daily and four hour bar charts, load up a 90 Simple Moving Average, and set it on the close. When the daily chart touches the SMA, switch to a 4 hour view, and consider the next break that the four hour chart offers, in the direction of the daily trend.
Switch to a 15 minute time-frame at that time and set the next break of the line as your entry, looking for momentum at 20:00 EDT, 02:00 EDT, and 07:00 EDT, and looking for a 20-30 initial move, that may just turn into a runner.
That will be so much more enjoyable than jumping around like a butterfly with sore feet, reacting to the constant feed of banal opinion, delivered in a lightweight formula, designed for maximum impact, by those who, it seems, do not actually trade.
We could have condensed the message, so that it flows in-line with the 'dumb-down' style and feel that we are all not only getting used to, but accepting, and in some cases positively embracing. Maybe we have it wrong, so just in case, here it is, twitter style:
Tic lower. Foreigners dump DLR. Equities lost. LOL. Buy DLRS. GR8. Get out quick, but hold some. Sell if equities move. Going to walk. BRB.
Serious, but light hearted, in an ironically funny kind of way. Give us the daily and 4 hour chart, and get us away from the noise, please.