Treasury International Capital Flow Stats
Posted By thestatedtruth.com on August 27, 2010
By Brian Pretti on Fri, 27 Aug 2010Â Â Â
The most important information in the Treasury International Capital flow stats concerns equities. Have a look at the chart below. To the point, the top clip of the chart is the twelve month moving average of foreign purchases of US equities. Clearly there is cyclical rhythm here. In the bottom clip we are looking at the same data with the history of the S&P overlaid. I’m sure you can guess where I’m going with this.
Again, right to the point, at least over the last decade, the foreign community has virtually a perfect track record in top-ticking US equity prices when using the 12 MMA data. And of course the reason I am bringing this up right now is that we may have reached yet another important cycle peak in foreign purchases of US equities. We’ll have to see what lies ahead, but as of now the May-June period of this year was the first very meaningful downtick in the 12MMA numbers for foreign purchases of US equities for the current cycle post the May 2009 US equity market bottom. This peak is clearly seen in the clip above. To show you how important this has been over time and why we need to sit up and take notice of this data right now, the following table goes back a few decades and quantitatively recounts what has happened to S&P price only performance in the three, six, nine and twelve month periods after the 12MMA of foreign purchases of US equities has peaked. Have a look.
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