Net foreign purchases of U.S. equities in December were -$11.6 billion, the
biggest net sale ever and only the second month of net sales since September
2004.
A closer look indicates that the net sale was probably related to a
shifting of capital from U.S. stocks to European stocks, particularly German
stocks. In fact, the largest net sellers of U.S. stocks in December were
German, with net sales for Germany at $5.3 billion during the month.
This
fits with the divergent performances between German stocks and U.S. stocks
during the month. German shares gained 4.6% compared to a 1.4% gain for the
S&P 500.
The second-largest seller was the U.K., with net sales of $1.598 billion, a
figure that likely reflects sales by entities throughout the world (more so
than the data for Germany). Interestingly, the third-largest seller was
Ireland, with net sales of $1.574 billion. The Irish sales fit with the
performance of Ireland's stock market, which gained 8.2% in December.
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Tony Crescenzi is the chief bond market strategist at Miller Tabak + Co., LLC, and advises many of the nation's top institutional investors on issues related to the bond market, the economy and other macro-related issues. At the request of the Federal Reserve, Crescenzi is a regular participant in the board's Livingston Survey of economic forecasters. He is also the author of The Strategic Bond Investor. At the time of publication, Crescenzi or Miller Tabak had no positions in the securities mentioned in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Crescenzi also is the founder of Bondtalk.com, a popular Web site covering the bond market and the economy. Crescenzi appreciates your feedback; click here to send him an email.
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