Why Would Foreign Investors Be Interested in US Markets?

I am currently in the process of touring Southeast Asia an effort to evaluate the economies herein. These will be important to us going forward, especially in the near term, and we should have a firm grasp on the strength of these economies as a result. This tour should allow me to provide this information to you in an accurate, hands - on fashion. This is my way of approaching economics, as most of you know. I'll leave the number crunching to the bookworms. I want to know what people think, because 'if you know people, you know economics' so I am here to learn first hand.

I left straight from my speech at the Traders Expo in Las Vegas to begin this month-long tour, and I was rather shocked once I got here.

At the Traders Expo I spoke about the Investment Rate, the deteriorating Dollar and I had, as you would expect, a bearish stance on the US Economy for the months and years that follow. I tried to suggest that the cup was half full, because we can make money on the downside too (especially with ATP), but I found myself fielding objective questions about foreign investment into the US.

My answers, as you would imagine from our recent Webinar, suggested that foreign interest in US Investments should continue to be extremely weak until such time as we control our deficit, and there's no end in sight for that right now. I offered return statistics which showed growth in US Markets of 28% since the last fed tightening cycle, but because the dollar fell 20% against the Euro, foreign investors only received a 4% rate of return for the risk they assumed.

Why would foreign investors be interested in US Markets, in the face of these ratios?

I knew this was true, but I didn't know the extent of the distain for the US Dollar until I crossed the pond. We don't hear this on Television, or in the Newspapers, because the Media offers a positive spin on the Markets, but foreigners have very little interest in investing in US Markets at this time. In addition, they have very little interest in holding US Dollars. Financially, the United States looks like a very bad investment. Why would anyone invest in a company with a 66% debt to equity ratio when there are many other companies (we're analogizing here) with 2.7% debt ratios and much higher growth rates? That's, essentially, what we're faced with.

From OPEC to China, and throughout the other 20 countries pegged to the dollar, no one feels comfortable with the Dollar or our Economy at this time. Further, to hope that foreigners hold up our markets with capital investment is congruent to using a four letter word at the dinner table on Thanksgiving Day; you just don't do it! Hope, in this environment, doesn't make any sense. Yeah, they want to sell to the United States, but they don't want to invest here, unless it's vertically integrated to their business.

Not only is there a distain for the dollar, but growth rates in Southeast Asia are slowing as we speak.

Singapore missed growth Estimates by a huge margin today, and China Announced that they would completely halt lending for the rest of the year to curb potential inflation. Sector growth rates are likely to slow considerably during the 4th quarter. We may not have the support we need, or that we are hoping for, from this region.